is a financial payment plan which enables entitled members, usually retirees, to receive a fixed amount of income on a regular basis. In order to become eligible for a pension, you are supposed to contribute a predetermined percentage of your salary towards building up the retirement fund deposit. However, many employers have formulated solutions that help employees to automatically finance their retirement from an early stage of their employment chapter. Upon clocking the retirement age, you automatically qualify to obtain your savings through an arrangement that facilitates receiving of steady income for a substantial period of time. Types of Pension plans
Although pension plans are aimed at solving comparable challenges, their structure and expected benefits show some form of contrasts hence there is need to evaluate them on an individual basis. Let’s take a look on the types of pension plan:Deferred Annuity Plan:
Under the Deferred Annuity
plan, your pension will not be paid immediately but postponed for a specified period of time. As the policyholder, you will have a say on when you can receive the benefits. Upon Maturity
of the policy, the accumulated amount which includes- sum assured, bonuses and guaranteed additions, is invested to enable generation of passive income. Life Insurance Corporation of India includes Jeevan Nidhi plan as a deferred annuity plan. The deferred annuity plan is mainly recommended for workers who have a long way to go before attaining the retirement age. Immediate Annuity Plan:
The immediate annuity plan is unique by itself as you are also allowed to purchase the plan for a lump sum in return for fixed regular payments. This plan is good for people who aren’t Assured
of a regular monthly income but can occasionally make a lot of money maybe after a successful trade deal. Even so, it also accommodates everyone depending on a regular pay. Jeevan Akshay II offered by LIC is an example of an immediate annuity pension plan
. Under the immediate Annuity plan, you will have following options:Annuity certain:
Under an annuity certain, you will be paid a fixed sum of money for a specified period of time. As a beneficiary, you will always be guaranteed of regular monthly income up until the indicated period of time lapses. Guaranteed period Annuity:
Under the guarantee period annuity plan, you will be assured to receive your pension amount for a specified period of time. In the event that you may die before the stated period expires, your Beneficiary
will be entitled to receive the remaining pension benefits. For instance, if you were entitled to receive pension amounts for 20 years but you die on your fourth year, the beneficiary will receive regular payments for the next 16 years as a fulfillment of the plan.Life Annuity
Under life Annuity, you will be given a regular pension amount throughout your life. Upon the death of the policyholder, the beneficiary will receive a maturity amount which is also regarded as return of purchase price.
For instance, Life Insurance Corporation of India takes in the Jeevan Akshay annuity plan which payment arrangements include: 5, 10, 15, 20 years and life.Why join retirement plans
At retirement, you are actually bidding farewell to your monthly paycheck. If for any reason you hadn’t enrolled for any retirement plans as provided by your respective state, chances are quite high that you may end up in financial challenges after retirement.
Since a person’s financial needs doesn’t end upon attaining the retirement age, pension income comes in handy as a perfect replacement to the previously earned monthly income, allowing beneficiaries to carry on with their usual activities without any interruptions. It’s simply the ideal solution to people who wish to save adequate amounts of money for a future so erratic and full of wants.
So as to come up with the best pension planning solution which can adequately cater for your unique demands and projections about the economic future, it’s important to have a blue print of what you expect in years to come. With the guidelines clearly spelt out, it’s time to enter into talks with your employer or pension providers and adopt the plan you prefer. More often than not, experts on pension matters advise potential clients to have their contributions deducted from the pay slip to avoid slip ups like failure to commit their funds. Invest for your future today through pension plans.