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Different Types of Retirement Schemes

Different Types of Retirement Schemes
  • 24th Sep 2021 |
  • 1,487

Retirement plans are schemes that are designed in a way so as to pay a lifelong monthly income to you after you have fully retired from your active work life. By investing in a retirement scheme, you have to pay a specific amount of money from your savings until the time you retire and this accumulated money is later given back to you as pension. Not only do these plans financially secure your future but they also enable you to maintain the lifestyle you always have. There are various retirement plans that differ on the following basis:

  • Payout requirements of the subscriber (lump sum/annuity)
  • Insurance inclusive or non-insurance inclusive
  • Payout timing (deferred/immediate)
  • Returns on the plan
  • Risk Appetite

8 types of retirement schemes - Infographic

By continuously investing in a retirement plan, the amount multiples over the years due to compounding. It is one of the best kinds of investments for the long haul. Here are a few types of the best retirement plans in India.

1. DEFERRED ANNUITY

In this type of scheme, you have to pay a regular premium or a single premium over the policy term to build a corpus. Post completion of the policy tenure, you receive the money as pension. Furthermore, there is the benefit of tax exemption - one-third of the corpus is tax-free on withdrawal.

2. IMMEDIATE ANNUITY

In this type of retirement insurance policy, you have to pay a specified amount in lump sum and avail the pension immediately. Here, you have a range of annuity options to choose from and the premiums paid are tax exempted. Additionally, your nominee is liable to receive the money in the case of an eventuality.

3. WITH COVER/WITHOUT COVER

With cover pension plans are one of the best as they come with a life cover. In case of your demise, a lump sum payout is made to your nominee. Without cover plans do not come with a life cover and in case of your demise, your nominee gets the corpus (up until the date of the eventuality).

4. ANNUITY CERTAIN

In this pension scheme, the annuitant is paid the annuity for a certain number of years. The term period to be chosen is upon the annuitant and in the case of your sudden demise, your beneficiary is entitled to receive the annuity.

Basics of Financially Secure Retirement planning - Infographic

5. GUARANTEED ANNUITY

Under this kind of pension scheme, you are entitled to receive pension for time periods like 5 years, 10 years, 15 years, or 20 years - regardless of whether you have survived the term period or not.

6. LIFE ANNUITY

This is one of the best income policies as you will continue to receive your pension up until you live out your years. This scheme also provides you with the option wherein you can choose your spouse as your beneficiary. After your demise, he/she will continue to receive the pension.

7. NATIONAL PENSION SCHEME (NPS)

This is a retirement scheme initiated by the government. Here, the money you invest is put into debt funds and equity funds so that you generate larger returns. However, the proceeds post maturity are not tax-free. Do note, you can withdraw up to 60% of your investments post-retirement.

It is advisable to start early on your retirement planning as the younger you begin, the better it is. Despite the fact that you can look into plans and tailor them to best fit your needs, you should remember certain thumb rules so as to reap the maximum benefits. Start today!

Understanding different retirement plans - Infographic

Kotak e-Term Plan

Features

  • Nominal Cost
  • Multiple Plan Options
  • Flexible Payout Options
  • Critical Illness Rider
  • Tax Savings
  • Long term Coverage

Ref. No. KLI/22-23/E-BB/492

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