What Are Retirement Plans for NRIs?
Retirement plans are pension products from Indian insurers, along with government-regulated schemes like NPS, that non-resident Indians can buy while living abroad. You pay in during your working years, the fund builds up, and after retirement it pays you a regular income. The plans are denominated in INR, which matters if you expect to spend that income in India. For tax purposes, you are generally an NRI if you stay in India for fewer than 182 days in a financial year. While buying a pension plan in India, the insurer may also ask you to show that you live abroad for work, business or an indefinite period.
Types of Retirement Savings Options NRIs Can Choose
NRIs have four main types of investment instruments for retirement savings. You could either buy an insurance-based annuity plan (guaranteed or market-linked), a government-regulated NPS plan, or invest in mutual funds or make a fixed deposit. The following is a list of NRI pension schemes and savings options.
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National Pension System (NPS):
The NPS is a market-linked pension scheme regulated by PFRDA. Indian citizens living abroad and OCIs can open a Tier I account.
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Annuity plans:
These are insurer plans that convert your savings into regular income. A deferred annuity plan builds a fund while you work abroad and pays later. An immediate annuity suits NRIs who return home with a lump sum and want income to start at once. Annuity plans are also categorised as based on factors like single, joint, variable annuity, etc.
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Mutual funds:
NRIs can invest in Indian mutual funds through an NRE or NRO account, either as a lump sum or a monthly SIP. Equity and hybrid funds can grow your corpus over a long horizon, but returns are market-linked and not guaranteed. Some fund houses restrict NRIs from certain countries, so check before you invest.
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Fixed deposits:
NRIs can open NRE, NRO or FCNR(B) fixed deposits with Indian banks. FD interest rates offer attractive guaranteed returns over the long-term and suit the part of your savings that should stay safe. They do not pay a lifelong income, so they work best alongside a pension plan, not instead of one.
Why NRIs Need a Retirement Plan
A job abroad may pay well, but it rarely comes with a promise of income after retirement. A retirement plan fills that gap. Here is why NRIs need one.
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Retirement can last decades: if you stop working at 60, you may need income for two or three decades. A lifelong annuity keeps paying for as long as you live.
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Benefits abroad may not protect your retirement: employer retirement benefits and social security in your country of residence often depend on your visa, your length of stay and your employer. If you move back to India, they may not cover your expenses here.
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Your expenses may be in rupees: many NRIs plan to return home or support parents and family in India. A rupee income from an Indian retirement plan matches costs like housing, healthcare and household expenses.
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Rising costs eat into savings: inflation erodes savings quietly, and medical costs usually rise faster than general prices. Some annuity plans offer increasing payouts to help your income keep pace.
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Smartly using power of compounding: a large savings balance can run out. A pension plan turns your corpus into regular payouts, so you do not have to guess how much to withdraw each year.
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Independence for you, security for family: a steady retirement income means you do not depend on your children or relatives, and most plans pay a benefit to your nominee if the worst happens.
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Discipline from a distance: regular premiums or an auto-debit from your NRE account build the habit even when other goals compete for your money.
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Investing in the India Growth Story: buying an NRI investment plan lets you benefit from India’s economic growth through market-linked products.
How Do Retirement Plans Work for NRIs?
The basics are the same as any pension plan. NRIs have a few extra steps.
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Choose how you pay
You can pay once (Single Pay), for a limited number of years (Limited Pay) or every year until the end of the term (Regular Pay). Regular Pay suits NRIs with steady foreign income. Limited Pay lets you finish paying while you are still earning abroad, before you move back. Single Pay works when you have a lump sum to invest.
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Pay premiums from an NRI account
Premiums can be paid from an NRE, FCNR or NRO account, or by remittance from abroad. Once you are non-resident, you cannot pay from a resident savings account.
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Let the retirement fund grow
During the accumulation phase, your money builds up. Depending on the plan, returns may be guaranteed or market-linked.
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Receive and repatriate your income
At retirement, the plan pays a regular annuity, and a lump sum where the plan allows it. The money is credited to your bank account, and how freely you can move it abroad depends on the account your premiums came from.
What your premium source means for repatriation
| Premiums paid from |
Payout credited to |
Repatriation |
| NRE or FCNR account, or remittance from abroad |
NRE, FCNR or foreign account |
Repatriable. Keep the bank statement or confirmation as proof of the premium source. |
| NRO account |
NRO account |
Repatriable up to USD 1 million per financial year. |
| Resident savings account |
Not permitted once you are non-resident |
Would breach FEMA rules. |
NPS for NRIs
If you want a retirement fund that sits outside an insurance plan, the National Pension System is the most direct route. Indian citizens living abroad and OCIs can join, from age 18 to 85, and contributions go into a Tier I (pension) account. Persons of Indian Origin (PIOs) cannot join, and Tier II is not open to NRIs or OCIs.
At exit, non-government sector subscribers can take up to 80% of the corpus as a lump sum, with at least 20% used to buy an annuity. If your corpus is ₹8 lakh or less, you can take all of it as a lump sum. The proceeds are credited to your NRO or NRE account, and moving the money abroad follows FEMA guidelines.
Here are the things you should know as a non-resident NPS subscriber:
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Documents required: PAN, a recent photograph, an Indian passport (or an OCI card for OCIs), address proof and proof of an NRE or NRO bank account.
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Payment channels: contributions come from your NRE or NRO account. NRI subscribers can also use the D-Remit facility.
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If your non-resident status changes: your account continues if you move back to India. Update your bank details when you move abroad.
Annuity Plans for NRIs
Below are the annuity options available for Indians residing abroad.
- Deferred annuity: for NRIs in their 30s, 40s or 50s who are still earning abroad. You pay premiums now and start receiving income later.
- Immediate annuity: for NRIs who are returning to India or have retired with a lump sum. Income starts shortly after you invest.
- Joint life annuity: for couples, especially where a spouse lives in India. Income continues until the last survivor dies.
- Life annuity with return of purchase price: for NRIs who want lifelong income and a legacy. The purchase price goes to your nominee after you die.
Tax Benefits on Retirement Plans for NRIs
Retirement plans can reduce your tax liabilities in India. NRIs are taxed in India only on income earned or received in India. That makes two points important: the benefit works only if you have taxable income here, and it depends on the tax regime you choose. Taxation on ULIP-based pension plans is treated differently depending on the premium you pay and the tax regime you choose.
Overview of Tax Benefits Under Different Sections
| Benefit |
Provision |
Limit |
What NRIs should know |
| Premium deduction |
Section 123 (formerly 80C) |
Up to ₹1.5 lakh in a financial year |
NRIs can claim it under the old tax regime, against taxable Indian income. |
| Additional NPS deduction |
Section 124(3) (formerly 80CCD(1B)) |
Up to ₹50,000, over and above the ₹1.5 lakh limit |
Same conditions apply. Useful if you contribute to NPS from an NRE or NRO account. |
| Tax-free maturity and death benefit |
Section 11 read with Schedule II (formerly 10(10D)) |
Subject to conditions on the premium paid |
The Act and your plan's terms set the conditions. Check them before you buy. |
| Tax-free NPS withdrawal |
NPS exit rules |
Up to 60% of the corpus |
The portion above 60% is currently treated as taxable at your slab rate. |
*Tax rules as of November 2026. Tax benefits are as per prevailing tax laws and are subject to change.
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Old regime only: the deductions above work only under the old tax regime. The new regime is the default, so compare both before you choose.
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Indian taxable income needed: a deduction reduces your Indian tax. If you earn little or nothing in India, there may be no tax to reduce.
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Annuity income is taxable: annuity paid to NRIs is subject to TDS, at rates that follow the tax treaty (DTAA) of the country where you live.
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Treaty relief takes paperwork: to claim a lower treaty rate, you usually need a Tax Residency Certificate (TRC) and Form 10F.
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Your country of residence may tax it too: your country may tax this income or require you to report foreign pension products. Claim credit for tax paid in India where your country allows it.
Factors to Consider Before Buying a Pension Plan
The best pension plan for NRIs in India is the one that fits where you will live, how you will pay and what you will owe in tax. Check these four factors first.
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Where you plan to retire
If you plan to return, choose a payment term that ends before you move and a payout that suits rupee spending. If you plan to stay abroad, check how you will repatriate the income. Your plan continues if your residency changes, but you must inform the insurer and move premium debits to the right account.
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How you will pay and repatriate
The account your premiums come from decides how your payout can be moved abroad. Pay from an NRE, FCNR or NRO account, or by remittance, and keep records.
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Eligibility in your country
Insurers set their own rules by country of residence. Some countries attract higher premiums, and a few are excluded. Check entry age, minimum premium and country eligibility before you apply. You will also give a FATCA and CRS self-certification, and a wrong declaration can cause problems later.
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Understanding tax rules and regimes
Check the latest income tax rules, compare the old and new tax regimes, and find out what TDS applies to your retirement plan.
Eligibility Criteria for NRIs to Buy a Retirement Plan
| Criteria |
Annuity plans from Indian insurers |
NPS (Tier I) |
| Who can apply |
NRIs. OCI eligibility varies by insurer and plan. |
Indian citizens living abroad and OCIs. PIOs are not eligible. |
| Entry age |
From 18 years, and up to 80 in some plans. Varies by plan. |
18 to 85 years. |
| Plan type |
Deferred or immediate annuity, on Single, Limited or Regular Pay. |
Tier I only. Tier II is not open to NRIs and OCIs. |
| Minimum amount |
Plan-specific. Many plans start at ₹30,000 to ₹36,000 a year. |
₹500 to open Tier I, with at least ₹1,000 a year. |
| How you pay |
NRE, FCNR or NRO account, or remittance from abroad. |
NRE or NRO account. D-Remit is also available to NRI subscribers. |
| How you are paid |
Credited to an NRE, NRO or foreign account, depending on the premium source. |
Credited to an NRO or NRE account. Repatriation follows FEMA. |
| Residency checks |
FATCA and CRS self-certification. Country rules vary by insurer. |
KYC as per PFRDA norms. |
Documents Required for NRIs to Buy a Retirement Plan
Exact requirements differ by insurer and plan. In most cases, you will need:
- Proof of identity and age: valid passport and PAN card.
- Proof of residence abroad: visa, residence permit or work permit, and address proof for your country of residence.
- Proof of Indian address: needed for NPS and often for plans, if you have one.
- Bank proof: an NRE or NRO account statement or cancelled cheque. If you remit from abroad, a bank statement or confirmation of the source.
- FATCA and CRS self-certification: your country of birth, country of tax residence and tax identification number.
- OCI card: for OCI cardholders.
- Other documents: a completed and signed proposal form and a recent photograph.
How Much Retirement Corpus Does an NRI Need?
A common rule of thumb is a retirement corpus of 20 to 30 times your current annual expenses. It is a starting point and does not account for inflation, so revisit the number as your expenses change.
For example, if your household spends ₹12 lakh a year today, you may need between ₹2.4 crore (20 times) and ₹3.6 crore (30 times). The lower end may be enough if you have other income, such as a foreign pension or rent. Aim for the higher end if you want a larger safety margin, plan to retire early or expect higher medical costs.
NRIs should adjust the figure for a few things
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Where you will live: expenses in India are in rupees, and expenses abroad are in a foreign currency. Work out your target in the currency you will spend.
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Exchange rates: your premiums may be paid in a foreign currency while your payout is in rupees. A weaker rupee lowers what each rupee of payout is worth abroad, so leave room.
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Existing retirement income: count any social security, foreign pension or EPF balance, and then fill the gap with a plan.
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Healthcare: budget for health cover in the country where you will retire.
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Set your target corpus first, and then work back to the premium you need to pay each year.
Mistakes NRIs Should Avoid in Retirement Planning
- Paying from the wrong account: paying premiums from a resident savings account after becoming non-resident breaches FEMA rules. Paying from an NRO account limits repatriation.
- Not telling the insurer when you move: residency changes affect your KYC, your premium source and your tax details. Update them.
- Assuming deductions apply automatically: they need the old regime and taxable Indian income.
- Ignoring tax in your country of residence: foreign pension products may carry local tax and reporting rules.
- Giving a wrong FATCA or CRS declaration: insurers report under these rules, and an incorrect residency declaration can cause trouble at claim time.
- Forgetting nominees and KYC updates: keep your nominee and contact details current, so your family can claim without delays.
- Starting late: every year of delay means higher premiums for the same pension.
Key Takeaways
When it comes to retirement planning, non-resident Indians can choose from a diverse set of investment options in India. If you are an NRI, you can buy a retirement-focused product seamlessly through online platforms like Policybazaar. Once your plan is active, you can continue to pay regular premiums from an NRE, FCNR or NRO account. Along with different annuity products, NPS stands out as a key option to build your corpus and a retirement income.
FAQs
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Q1. Can NRIs buy pension plans from Indian insurers?
Ans: Yes. NRIs can buy Indian life insurance and pension products under the FEMA and IRDAI framework. Availability, entry age and terms vary by insurer, plan and your country of residence.
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Q2. Can NRIs invest in NPS?
Ans: Yes. Indian citizens living abroad and OCIs can open an NPS Tier I account, from age 18 to 85, with NRE or NRO account proof. PIOs cannot join, and Tier II is not open to NRIs and OCIs.
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Q3. Which is better for an NRI, NPS or an annuity plan?
Ans: Neither is better for everyone. NPS is market-linked and flexible, so your final corpus varies. An annuity plan gives an income the insurer fixes. Many NRIs use both, and NPS requires you to buy an annuity with at least 20% of your corpus at exit, unless your corpus is ₹8 lakh or less.
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Q4. Can I take my pension money out of India?
Ans: Yes, subject to FEMA rules. Payouts from premiums paid by NRE, FCNR or remittance are repatriable. Payouts credited to an NRO account can be repatriated up to USD 1 million per financial year.
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Q5. Is the pension I receive taxable for an NRI?
Ans: Yes. Annuity income is taxable. The insurer deducts TDS under Indian tax law. To have it deducted at a lower treaty (DTAA) rate, give the insurer a Tax Residency Certificate, Form 10F and a self-declaration.
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Q6. What happens to my plan if I move back to India?
Ans: Your policy continues. Inform the insurer, move premium payments to your resident savings account and keep your NRI-period premium records, since they support any future repatriation. An NPS account also continues.
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Q7. Can OCI cardholders buy a retirement plan?
Ans: OCI cardholders can open an NPS Tier I account. For insurer plans, eligibility depends on the insurer and the plan, so check before you apply.
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