Pension Plans

Pension plans for NRIs are financial instruments designed to help them accumulate funds for retirement. NRIs can contribute a portion of their earnings to these plans during their working years. The contributions are invested, generating returns over time to build a pool of funds that supports their retirement income needs.

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What is a Pension Plan?

A pension plan is one of the best investment options for NRIs, offering a secure future by building a substantial corpus through lump sum or regular premium payments. This ensures NRIs have a guaranteed steady income stream during retirement, supporting their financial needs post-employment. 

Consistent contributions to a pension plan over one's working years empower NRIs to construct a significant fund, addressing their financial necessities during retirement and beyond.

Best Pension Plans in India 2024 for NRIs

Here are some of the best pension plans in India available in the market.

Pension Plans in India Entry Age Maturity Age Policy Term Tax Benefit Minimum amount to Invest (yearly)
Tata AIA Fortune Maxima  18-60 years  100 years  100 minus issue age  Offers  Tax benefits u/s 80C and 10 (10D) of the Income Tax Act, 1961 Rs. 18,000 
Bajaj Allianz Life LongLife Goal 18- 65 years 99 years of age 99 years- Entry age Offers  Tax benefits u/s 80C and 10 (10D) of the Income Tax Act, 1961 Rs. 25,000 
HDFC Life Click 2 Wealth 18-60 years  18-75 years of age 20-64 years Offers  Tax benefits u/s 80C and 10 (10D) of the Income Tax Act, 1961 Rs. 12,000 
Max Life Online Savings Plan  18-60 years  18-45 years  5 to 67 years  Offers  Tax benefits u/s 80C and 10 (10D) of the Income Tax Act, 1961 Rs. 12,000 
Edelweiss Life Tokio Wealth Secure Plus 18-60 years  18 to 70 years 5-25 years  Offers  Tax benefits u/s 80C and 10 (10D) of the Income Tax Act, 1961 Rs. 24,000 
ICICI Prudential Signature  18-75 years  99 years  10-30 years Offers  Tax benefits u/s 80C and 10 (10D) of the Income Tax Act, 1961 Rs. 24,000 
Tata AIA Life Guaranteed Monthly Income Plan 6-60 years of age 68 years of age 5, 8, 12 years Offers tax benefit U/S 80C & 10(10D) of IT Act Rs. 36,000 
Bajaj Allianz Pension Guaranteed Pension Plan 0-100 years of age N/A Lifetime Offers tax benefit U/S 80C & 10(10D) of IT Act Rs. 25,000 
Max Life Forever Young Pension Plan 30 years-65 years 50-75 years of age 10 years to 75 years-Entry age Offers tax benefit U/S 80C of IT Act Rs. 25,000 
ICICI Pru Easy Retirement Plan 18-70 years of age 30-80 years of age 10, 15, 20, 25, 30 years Offers tax benefit U/S 80C & 10(10D) of IT Act Rs. 48,000 
LIC Jeevan Akshay 7 Pension Plan 25-100 years of age N/A Lifetime Offers tax Benefit U/S 80C of IT Act Rs. 1 lakh
LIC New Jeevan Shanti Pension Plan 30-79 years of age 31-80 years of age -- Offers tax Benefit U/S 80C of IT Act Rs. 1.5 lakhs
Max Life Guaranteed Lifetime Income Pension Plan 0-85 years of age 26-90 years of age N/A Offers tax benefit U/S 80C IT Act Rs. 25,000 
Aditya Birla Sun Life Empower Pension Plan 25-70 years of age 80 years of age 5-30 years Offers tax benefit U/S 80C of IT Act Rs. 18,000 
IndiaFirst Life Guaranteed Annuity Plan 40-80 years of age N/A Lifetime Offers tax benefit U/S 80C IT Act Rs. 1 lakh
Kotak Premier Pension Plan 30- 60 years of age 45-70 years of age 10-30 years Offers tax benefit U/S 80C of IT Act. Rs. 1 lakh
SBI Life Saral Retirement Saver 18-65 years of age 40-70 years of age 5, 10- 40 years Offers tax benefit U/S 80C of IT Act Rs. 1 lakh
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Disclaimer: Policybazaar does not endorse, rate, or recommend any particular insurer or insurance product offered by an insurer. The tax benefit is subject to changes in tax laws. *Standard T&C Apply

What are the Different Types of Pension Plans in India?

As an NRI planning for retirement in India, you have several pension options to consider. 

Let's explore these pension funds in detail:

Pension Plans Description
Deferred Annuity
  • Regular or lump-sum payments for corpus accumulation.
  • Secure pension income upon policy completion.
  • Enjoy tax exemption on investments.
  • 1/3rd tax-free, 2/3rd taxable on corpus withdrawal
  • Amount invested is inaccessible for emergencies.
  • Ideal for NRIs with various payment preferences.
Immediate Annuity
  • Provides instant pension to NRIs upon payment of a lump-sum amount
  • Offers a range of annuity options to choose from for NRIs
  • Premiums paid towards immediate annuity scheme are tax-exempted as per Income Tax Act, 1961
  • Policy nominee receives the money in case of the insured person's demise during the policy's tenure.
Annuity Certain
  • Annuitant receives annuity payments for a specific number of years
  • Annuitant chooses the period of payment
  • If the annuitant passes away before receiving all complete payments, the annuity is paid to the policy's beneficiary.
Guaranteed Period Annuity
  • Offers annuity payments to NRI policyholders for specified periods, such as 5 years, 10 years, 15 years, or 20 years, regardless of whether the insured survives that duration
Life Annuity
  • Provides pension payments to the annuitant until their death
  • If the option of 'with the spouse' is chosen under the life annuity plan, the pension amount is transferred to the policyholder's spouse in the event of the policyholder's death.
National Pension Scheme (NPS)
  • Introduced by the Government of India for securing the individual's financial future after retirement
  • Money in NPS is invested in equity and debt funds to generate returns on investment
  • 60% of the amount can be withdrawn at retirement, while the remaining 40% is used to purchase an annuity
  • Maturity proceeds are not tax-free

NRIs can use the NPS Calculator to easily calculate potential returns from the scheme.
Pension Funds
  • Long-term pension scheme regulated by the Government under the Pension Fund Regulatory and Development Authority (PFRDA).
  • Offers better returns upon maturity compared to other plans.
  • Remains active for a specified period.
  • Policyholders can withdraw their annuity sum during the aggregation stage, providing financial security in emergencies.
  • Reduces reliance on banks for loans in such situations.
Whole Life ULIPs
  • Money stays invested for the entire life of the insured.
  • Partial withdrawals are allowed upon retirement, providing tax-free income.
  • Additional withdrawals can be made as needed.
Defined Benefit
  • Guarantees a specific retirement income for life
  • Calculations under Defined Benefit Plans are based on earnings and years of service with the employer
Defined Contribution
  • Retirement income not guaranteed, but contributions are
  • Both you and your employer can contribute
  • Your contributions determine your retirement savings
  • Retirement amount depends on contributions and investment returns.
SBI Life Insurance 
  • Backed by State Bank of India, a leading Indian bank.
  • Offers plans for protection, retirement, child savings, and wealth creation.
  • Buy online or through 24,000+ branches across India.
  • Manage policies and claims conveniently through Smart Care portal.
Pension Plans Available in the UK 
State Pension
  • Government-provided pension is available upon reaching State Pension age.
  • Eligibility based on National Insurance contributions.
  • The amount received is determined by the National Insurance record.
  • Provides financial support during retirement.
  • Ensures a basic level of income security for eligible individuals.
Workplace Pension
  • Automatic enrollment for eligible employees.
  • Criteria: Age over 22, earning above £10,000/year, not in a pension scheme.
  • Mandatory employer contribution: At least 3% of salary.
  • Option for employees to contribute more.
  • Aims to ensure financial security during retirement.
Personal Pension
  • This is a pension scheme that you set up yourself.
  • You can choose how much you want to contribute.
  • You can choose how your pension is invested.
See More Plans

What are the Benefits of Pension Plans for NRIs?

Benefits of buying the best Pension Plans online for NRIs:

  • Retirement Security: Pension plans provide NRIs with a secure source of income during retirement, ensuring financial stability.

  • Tax Efficiency: Pension Plans for NRIs offer tax benefits, helping them to optimize their savings and reduce their tax liabilities.

  • Currency Diversification: Pension plans allow NRIs to diversify their assets by investing in different currencies, potentially mitigating currency risk.

  • Long-Term Growth: Pension plans offer opportunities for long-term growth through investments in various assets, helping NRIs build wealth over time.

  • Flexibility: Some pension plans provide flexibility in contributions and withdrawals, allowing NRIs to adapt to changing financial needs and circumstances.

  • Convenience: NRIs can conveniently purchase pension plans online from anywhere in the world.

  • Flexible Annuity Options: NRIs can choose between immediate or deferred annuity based on their preferences and needs.

  • Generous Sum Assured: The sum assured is 10X the annual premium or fund value, and provides financial security to NRIs and their nominees.

  • Tailored Vesting Age: NRIs have the flexibility to select the vesting age, determining when they start receiving their monthly pension.

  • Long Accumulation Period: NRIs benefit from an extended accumulation period, allowing them to pay regular premiums towards their policy over an extended timeframe.

  • Surrender Value Option: NRIs have the option to receive surrender value if they decide to surrender the pension plan before maturity, providing financial flexibility.

What are the Eligibility Criteria to Invest in Pension Plans?

The three main eligibility criteria for purchasing retirement plans in India are:

  • NRIs are eligible to buy Pension Plans.

  • Minimum entry age: 18 years (some plans may require 30 years).

  • Maximum entry age: typically around 70 years for NRIs.

  • Policyholders must pay a minimum premium, with pension amount determined accordingly.

  • Vesting age: generally set at 40 years but can vary among providers.

  • NRIs can plan retirement by considering these age-related factors and selecting a pension plan that is suitable for them.

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What is Retirement Planning?

With the rapidly changing economic landscape in the world, it has become important for NRIs to plan for a secure and comfortable retirement. Retirement planning for NRIs involves strategizing and investing to secure financial stability and independence during retirement while considering factors like currency fluctuations, tax implications, and long-term financial goals. It aims to ensure a comfortable lifestyle post-retirement regardless of geographical location.

Retirement planning for NRIs involves creating a comprehensive strategy that anticipates inflation, healthcare expenses, and evolving lifestyle demands. The objective is to generate adequate funds and assets throughout one's career to sustain financial independence during retirement.

It is important to start planning for retirement as early as possible to accumulate enough funds for future expenses and maintain a standard of living during retirement years. 

What are the Advantages of Retirement Plans in India?

For Non-Resident Indians (NRIs) looking to secure their financial future, pension plans in India present several advantages. Some of them are: 

  • Pension plans in India are tailored for NRIs, ensuring continuous savings over time.

  • These plans focus on creating annuities for NRIs, generating reliable income post-retirement.

  • Indian pension plans for NRIs secure their future and offer the potential for better returns, making them a smart investment for retirement.

  • Besides retirement savings, these plans offer insurance coverage for the financial security of the policyholder's family.

How Much Should You Save for Retirement?

Here are some key points to consider:

  • Define Your Retirement Goals: Evaluate the lifestyle you aim to sustain during retirement, factoring in expenses such as housing, healthcare, travel, and hobbies as an NRI.

  • Estimate Retirement Duration: Calculate the anticipated number of post-retirement years to ensure adequate financial provisions.

  • Factor in Inflation: Account for inflation's impact on your retirement savings to maintain purchasing power over time.

How Do Pension Plans Work?

Step 1: You make regular contributions during your working years.

Step 2: Compound interest & market returns help your money grow over time.

Step 3: You stay invested for a certain period to be eligible for pension benefits.

Step 4: At your retirement age, start receiving a monthly pension.

Why Do You Need to Start Retirement Planning Today?

Starting retirement planning early is important for several reasons:

  • Financial Security: Retirement planning ensures financial stability and security during post-career years.

  • Inflation Protection: Planning early helps offset the impact of inflation on retirement savings.

  • Long-term Goals: NRIs need to consider their long-term financial goals and lifestyle choices post-retirement.

  • Tax Efficiency: Early planning allows NRIs to explore tax-efficient retirement savings options.

  • Compound Growth: Starting early harnesses the power of compound interest, increasing retirement savings over time.

  • Unexpected Events: Planning mitigates the impact of unforeseen circumstances and emergencies during retirement.

  • Customized Strategies: Early planning allows NRIs to tailor retirement strategies to their unique circumstances and aspirations.

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What are the Steps to Buy a Retirement Plan?

To buy a retirement plan, follow these steps:

  • Determine Your Retirement Needs: Determine your goals, lifestyle, and estimated expenses based on factors like age and financial obligations.

  • Research and Compare Plans: Explore different retirement plans, compare features, benefits, costs, investment options, and payout structures.

  • Review Terms and Conditions: Thoroughly examine the plan's terms, including vesting period, contribution limits, withdrawal restrictions, fees, and charges.

  • Monitor and Review: Regularly track your plan's performance, stay informed about any changes, and adjust contributions or investment strategy when needed.

FAQ's

  • What are the 3 main types of pensions?

    • State Pension: Government-provided based on National Insurance contributions, available at State Pension age.

    • Workplace Pension: Employer-sponsored scheme with contributions from you and your employer (usually mandatory).

    • Personal Pension: You set up yourself, offering flexible contributions and investment choices.

  • How much pension should I have at 55?

    There's no one-size-fits-all answer. It depends on your desired retirement lifestyle, income needs, and contributions made. However, a general guideline is to aim for a pension pot of around 10-15 times your final salary by age 55. This can be achieved through a combination of State Pension, workplace pension, and personal pension contributions.
  • Can an OCI card holder get a pension in India?

    Yes, they can access certain state-specific pension schemes or contribute to NPS like NRIs to build a retirement corpus.

*All savings are provided by the insurer as per the IRDAI approved insurance plan.
*Tax benefit is subject to changes in tax laws. Standard T&C Apply
~Source - Google Review Rating available on:- http://bit.ly/3J20bXZ
^^The information relating to mutual funds presented in this article is for educational purpose only and is not meant for sale. Investment is subject to market risks and the risk is borne by the investor. Please consult your financial advisor before planning your investments.

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