Pension Plans

help plan for retirement and offer the security of insurance.

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How to Get the Best Pension Annuities

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Investing in Pension plan could help you live a dignified life even after you stop working. Usually people apprehend that after retirement their income goes down in a sharp manner. In case of government employees, the income that comes in the form of pension is less than the half of their actual pay.

The private sector employees, on the other hand, usually do not get a pension in the fashion it is provided to government employees. A small proportion of private sector employees may get gratuity and some retirement benefits depending on the brand they worked with. And that too depends on a number of factors such as total tenure of work with the last company, etc.

But there is nothing to worry as long as you plan for your retirement. The growth of financial market in India has paved way for systematic pension plans that have potential to support your lifestyle after retirement. The payout depends on how well you plan it out. Here are a few quick tips to get the best pension annuities.

Start early: At the young age, we do not think about retirement. Mostly, the thought of retirement comes into mind after 35-40 years of age. That’s where the role of early start comes in. If you start investing at an early stage, let’s say, at the age of 30 years, by the time you reach the age of 55 years, you will have an edge over others who started late.

The saying “Slow and steady wins the race” is very much relevant in this context as well. Even if you keep investing smaller amounts from a young age, the compounding impact will help it grow consistently over a period of time

Optimise savings: The Annuity rate is directly dependent on the volume of your savings. An annuity is the amount which you get in the form of monthly payout/pension after a certain age that is called vesting age. The larger the amount of your savings, the larger the amount of the annuity you get.

Invest in equities: In order to get the best annuity rates, you shall invest at least 25-40 per cent of your total investment in a pension plan in the equity market. Given the Risk involved, investing in equities requires a long-term horizon. If you go conservative and prefer to invest most of the amount in government securities and debt instruments, then the rate of the annuity will also be conservative.