Pension funds are the best investment option to help individuals prepare for their golden years by providing them with a regular income stream post-retirement. With the right financial planning, pension funds can generate long-term growth and steady returns, ensuring that you have the financial security you need in your later years.
Peaceful Post-Retirement Life
Tax Free Regular Income
Wealth Generation to beat Inflation
Invest ₹6,000/month & Get Tax Free Monthly Pension of ₹60,000
Get the best returns & make the most of your Golden years
This article will help you to understand all about a Pension fund and get the benefits of financial security and peace of mind.
A pension is a retirement benefit you get as a regular fixed income stream during your retirement years. To get a pension you invest in the best pension plans during your working years.
Learn More About a Pension:
You invest in a Pension Fund to get periodic pensions later.
An employer or employee, an individual, or the government may fund your pensions.
A pension is an important component of retirement planning for being a reliable and predictable source of retirement income.
The amount of the pension benefit depends on:
Length of service
Terms of the pension plan
Pensions may be subject to various risks affecting your retirement amount. These risks may involve:
A pension fund is a type of investment fund that is set up to provide retirement benefits to employees/ individuals of an organization/ government institutions/ private sector individuals.
Important Points to Know About a Pension Fund:
The contributions made to the pension fund are invested in various assets.
Examples: Stocks, bonds, real estate, and other investments generating returns over time
The accumulated contributions and returns work as retirement benefits to the members of the pension fund.
The payouts of this fund are usually in the form of a regular income stream after retirement.
There are multiple ways to categorize a retirement fund depending on various criteria. Let us learn about different types of Pension Funds from a list of tables.
Depending on the category of individuals who are eligible to buy the retirement plan, the types of Pension Funds are as follows:
|Types of Pension Funds
|Open Pension Fund
|Closed Pension Fund
The variety of a pension fund varies along with the fund security and other benefits depending on who is selling the pension fund.
The types of pension funds based on pension plan provider are as follows:
|Types of Pension Funds
|Private Pension Fund
|Public Pension Fund
A pension fund is also categorised based on the category of pension payout options in the following ways:
|Types of Pension Funds
Various insurance companies, government agencies, and mutual fund houses offer pension funds in India.
The list of some of the most popular and best Pension Funds in India is as follows:
|Type of Pension Fund
|Investment Amount Limit
|Who can Invest?
|Unit Linked Insurance Plan (ULIP)
|Rs. 500—No Limit
|Available for all
|Available u/ Sec 80C and 10 (10D) of the IT Act
|National Pension Scheme (NPS)
|Age of up to 60-70* years (extendable by 5 years)
|Available u/ Section 80 C, 80 CCD, and Section 80 CCE of the IT Act, 1961
|Public Provident Fund (PPF)
|Rs. 500 – 1.5 lakhs per year
|18 years till employment
|15 years or more
|Atal Pension Yojana (APY)
|Rs. 42- Rs. 1,454 per month
|Unorganised sector workers
|18-40 years of age
|20 years or more
|Rs. 1,000- Rs. 5,000
|Tax benefits u/Sec 80CCD of the IT Act
|Employee Provident Fund (EPF)
|Until the employee gets retirement
From Debt-based investments
|Tax-free interest and returns
|Pension Funds by Insurance Companies
|Rs. 1000-No Limit
|Open to all
|40 years of age- lifetime
|Tax benefits available ULIP or ELSS funds
|Retirement Pension Mutual Funds
|Rs. 500- No Limit
|Open to all
|Minimum 3 years for ELSS funds
|Tax benefits in ELSS funds
Note: Central Government increased the entry age of the NPS Scheme for senior citizens to up to 70 years in 2021.
In India, pension funds typically have the following features:
|Pension Fund Regulatory and Development Authority (PFRDA) is the regulatory body for pension funds in India
|Multiple Fund Options
Here is a list of the top benefits of investing in a pension fund in India:
A pension fund provides you with a disciplined and structured approach to retirement planning. It allows you to build a retirement corpus and receive a regular income stream after retirement.
Contributions to pension funds are eligible for various tax benefits under the Income Tax Act. This helps in reducing your taxable income.
Best retirement funds offer long-term growth potential by investing in a diversified portfolio of assets. This opens up an opportunity to generate higher returns than traditional savings accounts.
Professional fund managers, having expertise in managing investments, manage pension funds. This can help you to achieve better returns on your investment.
Pension funds in India offer flexibility in terms of investment options, contribution amounts, and withdrawal options. This allows you to customize your retirement planning based on your needs and financial goals.
Whether you are an employee of a large corporation or a self-employed individual, a pension fund is a crucial source of retirement income. It can help you to achieve financial security and peace of mind in your retirement years. This makes it a valuable investment tool allowing you to enjoy your retirement years without worrying about your finances.
*All savings are provided by the insurer as per the IRDAI approved insurance
*Tax benefit is subject to changes in tax laws. Standard T&C Apply
+Returns Since Inception of LIC Growth Fund
~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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