Pension Plans

Pension plans are designed to help individuals accumulate funds throughout their working years to support their retirement income needs. They work by allowing individuals to contribute a portion of their earnings towards the plan during their working years. These contributions are invested and grow over time, generating returns and building a pool of funds.

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What is a Pension Plan?

A pension plan is a type of investment plan that helps individuals invest for their future retirement needs. It allows you to accumulate a pool of funds by making either a lump sum investment or regular premium payments over a period of time. These plans ensure that you have a secure future by providing you with a guaranteed steady income stream during your retirement years.

By contributing to a pension plan throughout your working years, you can build a substantial corpus that will support your financial needs when you are no longer actively employed.

Best Pension Plans in India 2023

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

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Types of Pension Plans in India

A wide range of pension plans in India are available to cater to the insurance seekers' requirements. These plans have multiple classifications based on the plan structure and benefits.

Let's explore these pension funds in detail:

Pension Plans	Description
Deferred Annuity	Allows you to accumulate a corpus through regular or single premium payments Pension is provided after completion of the policy tenure Offers tax exemption 1/3rd of the corpus is tax-free on withdrawal, while 2/3rd is taxable Amount invested in Deferred Pension Plan is locked and cannot be withdrawn for emergencies Suitable for investors with regular or lump-sum payments.
Immediate Annuity	Provides instant pension upon payment of a lump-sum amount Offers a range of annuity options to choose from 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 the policyholder 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 the National Pension Scheme 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.
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 allowed upon retirement, providing tax-free income. Additional withdrawals can be made as needed.
Defined Benefit	Guarantees a specific retirement income for life Calculation 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.
HDFC Life Insurance	Offers specialized pension plans in India Provides customized coverage and benefits Affordable costs for complete protection
Pension Plans Available in USA
SIMPLE IRA	Savings Incentive Match Plan for Employees (SIMPLE) Individual Retirement Account (IRA) or Simple IRA Designed for small businesses with 100 or fewer employees Easy and suitable for employees of small businesses.
SEP-IRA	Simplified Employee Pension (SEP) Individual Retirement Account (IRA) Opted by self-employed individuals or employers Tax deductions applicable Contributions made to employees based on eligibility.
Roth IRA	Special Individual Retirement Account (IRA) plan Under Roth IRA taxes are paid on deposited money Future withdrawals are tax-free

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Benefits of Pension Plans

Buying a pension plan online comes with a lot of benefits. Take a look at them below:

Annuity

An annuity is the fixed amount an investor will receive each year throughout their life tenure. annuity can be immediate or deferred depending upon the nature.

Sum Assured

The sum assured is a definite amount offered to the nominee of the plan at the end of the plan tenure. It is generally 10X the annual premium or the fund value of the policy.

Vesting Age

The vesting age is the age when the investors starts receiving the monthly pension from their pension plan.

Payment Period

The payment period is when the investor starts receiving the payments post-retirement.

Accumulation Period

The accumulation period is the complete time period wherein the investor pays regular premium towards their policy or plan.

Surrender Value

The surrender value of pension plans is the amount the insurance company will pay the individual if they surrender the plan before its maturity.

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Eligibility Criteria

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

Entry Age: Typically, the minimum entry age for a Pension Plan is 18 years, but some plans require an entry age of 30 years. Maximum entry age is usually around 70 years.
Premium: Policyholders must pay a minimum premium for their Pension Plan, as the pension amount is based on the premium paid.
Vesting Age: The age at which a policyholder begins receiving their pension is known as the vesting age, which is usually set at 40 years but can vary depending on the insurance provider.

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What is Retirement Planning?

With the rapidly changing economic landscape in the world, it has become vital to plan for a secure and comfortable retirement. It is essential to have a well-thought-out retirement plan that considers factors such as inflation, healthcare costs, and changing lifestyle needs.

It is crucial 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.

Comparison Between Pension Plans

Tax Benefits

Tax Free Income upon Retirement for Life

Tax Free Fund Value withdrawal

Tax Exemption on Amount Invested
SEC 80C UPTO 1.5 LACS
SEC 80C UPTO 1.5 LACs
SEC 80 CCD(1B) UPTO 50K
SEC 80C UPTO 1.5 LACS

Flexibility

Flexibilty to fully withdraw Fund Value anytime

Flexibilty to increase, decrease pension

Choice of multiple investment strategies to maximise returns

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*All savings are provided by the insurer as per the IRDAI approved insurance plan. Standard T&C Apply

Advantages of Retirement Plans in India

Let us learn some basic advantages offered by pension plans in India:

Retirement plans assure long-term savings, regardless of the premium payment mode.
Pension Plan in India focus on creating an annuity that can generate steady cash flow after retirement.
Retirement plans offer guaranteed income to meet day-to-day expenses.
They offer better returns and are a smart way to plan for retirement.
Retirement plans provide insurance coverage to financially protect the policyholder's family.

Pension plans offer tax benefits under Offers tax benefit U/S 80C & 10(10D) of Income Tax Act.
Retirement plans in India offer different options for individuals based on their needs and preferences.
Riders, such as critical illness or disability due to an accident can enhance the coverage of retirement plans.

How Much Should You Save for Retirement?

Here are some key points to consider:

Determine your retirement goals: Assess the lifestyle you want to maintain during retirement. Consider expenses like housing, healthcare, travel, and hobbies.
Estimate retirement duration: Calculate the number of years you expect to live after retirement. It's wise to plan for a longer retirement to ensure you have sufficient funds.
Consider inflation: Account for the impact of inflation on your retirement savings. Inflation erodes the purchasing power of money over time, so your savings need to keep pace with it.

Calculate retirement expenses: Estimate your future expenses, keeping in mind that some costs, such as healthcare, may increase significantly as you age.
Determine expected income sources: Identify potential sources of income during retirement, such as pensions, annuities, and government schemes. This will help determine how much additional savings you need.

Seek professional guidance to create a retirement plan tailored to your specific needs and financial situation. An advisor can help you calculate the ideal savings amount.

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

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Why Do You Need to Start Retirement Planning Today?

Starting retirement planning early is vital due to several reasons:

Time for Compound Interest: The power of compound interest can significantly boost your retirement savings. By investing early, your money has more time to grow, and the returns on your investments can compound over the years, increasing your overall savings.
Inflation: Inflation erodes the purchasing power of money over time. By planning for retirement early, you can account for inflation and make sure your savings are sufficient to maintain your desired lifestyle.

Rising Life Expectancy: With advancements in healthcare and improved living conditions, life expectancies are increasing. Planning early allows you to prepare for a longer retirement period, ensuring you have enough funds to sustain yourself.
Flexibility and Options: Early retirement planning provides more flexibility in choosing investment options and strategies. You can take advantage of long-term investment vehicles, such as stocks or mutual funds, which generally offer higher returns over time.
Unexpected Events: Life is unpredictable, and unforeseen circumstances such as medical emergencies or job loss can impact your retirement plans. By starting early, you can build an emergency fund and have a safety net in place to handle any unexpected expenses.

Lifelong pension rate for you and your spouse

What are the Steps to Buy a Retirement Plan?

To buy a retirement plan, follow these steps:

Assess 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 is the Employees' Provident Fund or Employees' Pension Scheme?

The Employees' Provident Fund (EPF) is a savings scheme in which both employees and employers contribute a certain percentage of the employee's salary to provide financial security and retirement benefits.
What is a Participating and Non-Participating Pension Plan?

A participating pension plan is a retirement plan where the employer shares investment risk and rewards with employees. It offers potential bonuses or increased benefits based on plan performance. In contrast, a non-participating pension plan does not involve sharing investment risk or rewards and provides fixed benefits determined by predetermined factors such as years of service or salary.
Why do I need pension plans?

A pension plan assures a regular income post retirement when you enter the no-more-paychecks phase of your life. Retirement is perhaps the best time to enjoy leisure activities. A pension plan funds your to-do lists post-retirement. A pension plan is a great way to be financially independent in your second innings.
I already have a provident fund account. Do I still need a pension plan?

Yes, you do. 'PF is simply not enough.' The ever-growing inflation will make your PF amount look relatively minuscule in the future. It will not suffice your future expenses. This becomes all the more important as you become more vulnerable to health problems in your old age. A lone provident fund amount will fail to support the healthcare needs financially.
How do I calculate the retirement corpus?

You can do that with a Pension Calculator. You need to put the following details in the calculator, which will summarize an ideal corpus. Present cost of living (monthly expenses) Inflation rate Retirement age Number of years you expect to live post-retirement.

What are the tax benefits of Pension Plans?

As per section 80CCC of the Income Tax act, the premiums paid out for the pension plan are subject to a deduction of up to a maximum of Rs 10,000 on taxable income.
What does a pension plan do?

Pension plan is a beneficial investment product for individuals who are willing to keep aside a pool of money at the earning age to reap the benefits after they retire.
How can I get Rs. 50,000 pension per month?

One can easily earn Rs. 50,000 per month through the NPS (National Pension Scheme). As per the scheme, a minimum of 40% (which can go up to 100%) of the total corpus needs to be invested in the purchase of an annuity that will provide pension returns after retirement. The remaining 40% (or the rest percentage not invested in the annuity) can be withdrawn tax-free as per the requirement of the individual.
How do I start a retirement plan?
Simple steps to be followed to start a retirement plan in India are:
- Start saving
- Know your retirement goals
- Have a detailed knowledge of your retirement plan
- Never use your retirement savings before retirement
- Plan carefully before investing
What pension plan is best?
Some of the best pension plans one can opt for are as follows:
- Tata AIA Fortune Maxima
- HDFC Life Click 2 Wealth
- Bajaj Allianz Life LongLife Goal
- Max Life Online Savings Plan
What is the maximum monthly pension?

As per the Government of India, the maximum limit of monthly pension is 50% of the top paid, that is, Rs. 1,25,000 per month currently. Pension is payable till the date of death of the pension holder.
How much money is a good pension?

As per some experts, 10 times the employees working life salary is a decent amount of money one can accumulate at the age of their retirement.

*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
^Tax benefit are for Investments made up to Rs.2.5 L/ yr.
~Source - Google Review Rating available on:- http://bit.ly/3J20bXZ

Secure Your Retirement Today

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Average Rating

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(Based on 147 Reviews)

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Calculators

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Insurers Offering Pension Plans

Tata AIA

Aditya Birla Sun Life

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Disclaimer: Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by an insurer.

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Pension Plans Insurance Reviews & Ratings

4.6 / 5 (Based on 147 Reviews)

(Showing Newest 10 reviews)

Suresh

Varanasi, April 08, 2023

★★★★★

User friendly experience

I was looking for a good pension plan and stumbled upon PolicyBazaar. I purchased the Pramerica Life Golden Age Plus Plan. The PolicyBazaar website is user friendly and easy to navigate. I was able to compare different plans and choose the one that best suited my needs. The policy documents were delivered promptly and their customer service team is always available to answer any queries. Overall a great experience.

Rajesh

New Delhi, April 07, 2023

★★★★★

Great Service and team

I recently purchased Bajaj Life Long Goal Pension Plan from PolicyBazaar and I am extremely satisfied with their services. The process was hassle free and the team was very helpful in guiding me through the entire process. The policy offers great benefits and the premiums are affordable. I highly recommend PolicyBazaar for all your insurance needs.

Rupesh

Ghaziabad, February 22, 2023

★★★★★

PNB Metlife Monthly Income Plan

I recently purchased a PNB Metlife Monthly Income Plan through Policybazaar and I am very pleased with the experience. It is an easy to understand policy that provides financial protection for my family in case of unforeseen circumstances. I really appreciate the flexibility of being able to change my premium payment frequency. Overall I am very satisfied with the entire process and would use their services again in the future.

Pranab

Chandigarh, February 19, 2023

★★★★★

Reliance Immediate Annuity Plan

My brother suggested me to choose Policybazaar and I bought the Reliance Immediate Annuity Pension Plan. The team was incredibly helpful and knowledgeable able to answer all of my questions and help me pick the best plan for my needs. The process was simple and straightforward. I would highly recommend Policybazaar to anyone looking for a good annuity plan.

Pushpa

Hyderabad, February 16, 2023

★★★★★

TATA AIA Life Easy Retire Plan

For my husband I got the TATA AIA Life Easy Retire Plan from Policybazaar and am very pleased with it. It offers a flexible premium payment option and I have complete control over when and how much to invest. Policy Bazaar team was also very helpful in helping me understand the plan and my options. Highly recommended

Farah

Varanasi, February 13, 2023

★★★★★

SBI Life Saral Pension Plan

I recently purchased the SBI Life Saral Pension Plan from Policybazaar the process was easy and straightforward. I received all the details of the plan in an organized manner which made it easier to understand. The plan offers flexibility to choose between different premium payment terms and provides a guaranteed rate of return.

Nazir

New Delhi, February 10, 2023

★★★★★

ICICI Pru Easy Retirement Plan

I recently bought the ICICI Pru Easy Retirement Plan and I am really glad I did. It's the best way to save for my future retirement. The Policybazaar customer service that I received was top notch with friendly and knowledgeable staff always willing to answer any questions I had.

Krishna

Bhopal, December 28, 2022

★★★★★

Huge vesting age

I bought HDFC Life pension super plus Pension plan to help me save for my older years. The plan has maximum vesting age of 75 years. Policy Bazaars plan and services are much beyond my expectations.

Preet

Srinagar, December 26, 2022

★★★★★

Flexible plan

I have a pension plan with Star Union Daichi which is one of the top worldwide insurers with deep experience of the insurance sector. It is a flexible plan. The customer provider of Policy Bazaar personally aided me in the greatest way possible. A modest policy that will pay off in the long run. Thank you for your support and services Policy bazaar.

Damini

Lucknow, December 24, 2022

★★★★★

One time payment option

My brother advised that I should get an insurance plan from Policy Bazaar. Before obtaining AGEAS FEDERAL pension plan I performed some navigation on numerous websites. The coverage can be extended for up to 75 years. There is a one time payment option available. If the policyholder is undecided the nominee might opt to invest the fund value in multiple funds. Thank you for your help and support Policy Bazaar.

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	Term Plan	Pension Plan
Objective	To get a financial backup for your family in case of your demise	To get a financial backup for yourself and your family while still living. Though, like a term plan, it also provides a sum assured to your family in case of your demise
Maturity Benefit	The entire maturity amount is paid out at once and is tax exempted	1/3rd maturity amount is paid out as a lump sum and is tax exempted. The rest 2/3rd is paid out as annuity and is taxable

Pension Plans

What is a Pension Plan?

Best Pension Plans in India 2023

Types of Pension Plans in India

Benefits of Pension Plans

Explore more Investment options

Eligibility Criteria

What is Retirement Planning?

Advantages of Retirement Plans in India

How Much Should You Save for Retirement?

Why Do You Need to Start Retirement Planning Today?

What are the Steps to Buy a Retirement Plan?

FAQ's

What is the Employees' Provident Fund or Employees' Pension Scheme?

What is a Participating and Non-Participating Pension Plan?

Why do I need pension plans?

I already have a provident fund account. Do I still need a pension plan?

How do I calculate the retirement corpus?

How is a Pension Plan different from a Term Plan?

What are the tax benefits of Pension Plans?

What does a pension plan do?

How can I get Rs. 50,000 pension per month?

How do I start a retirement plan?

What pension plan is best?

What is the maximum monthly pension?

How much money is a good pension?

Pension plans articles