Terminologies You Should Understand About Retirement Plans
Close
Close

Buy a Life Insurance Plan in a few clicks

Now you can buy life insurance plan online.

Kotak e-Term Plan

Protect Your family’s financial future with Kotak e-Term Plan. Know more

Kotak Assured Savings Plan

A plan that offer guaranteed returns and financial protection for your family. Know more

Kotak Guaranteed Savings Plan

A plan that offers long term savings and insurance in one premium. Know more

Kotak e-Invest

Insurance and investment in one plan with Kotak e-Invest. Know more

Kotak Health Shield

Insurance against medical expenses related to heart, brain, liver and Cancer. Know more

Terminologies You Should Understand About Retirement Plans

Terminologies You Should Understand About Retirement Plans
  • 15th Feb 2022 |
  • 931

Retirement planning should be one of the most important parts of your financial goals to lead a safe and sturdy life with your loved ones in the future. You do not want to end up in a situation wherein you are having to look for options to fund your emergency requirements and needs. However, many of you do not know where to begin, and so, unfamiliar banking terminologies can seem a little intimidating. Therefore, to help you out, here is a list of retirement planning terms to build some confidence and help you get started.

Employee Provident Fund

The Employees’ Provident Funds and Miscellaneous Act, 1952, governs the primary system and functioning of the Employee Provident Fund, also commonly known as EPF. In this, both the employee and the employer contribute 12% of the employee’s base salary and dearness allowance to the fund. The current interest rate on EPF stands at 8.50% per annum.

Annuity Plans

An annuity plan is an agreement you enter into with a financial services company or an insurance company. The firm offers to give future income (typically with some earned interest amount) for a fixed number of years or for your entire life. Annuity plans are a great option for people who want to enjoy a consistent level of income when they no longer work. Fixed, variable, instant, and index annuities are some common examples of annuity plans. It is advisable to consult a financial advisor before making any decisions.

Defined Contribution Schemes

Defined contribution schemes are the ones where you invest a specific amount and the pension is calculated based on the fund returns and the amount you contribute. Products like EPF and National Pension Scheme (NPS) fall under this category. In NPS, you can invest till 60 years of age. There are various other variations available in NPS where you can go in detail but we would talk more about it in some other article.

Glossary on terminologies you should know and understand about retirement plans and pension schemes

Defined Benefit Schemes

Defined benefit plans are becoming increasingly rare as a consequence of the rising costs and the degree of risk employers assume when financing and monitoring investments. However, they are very common, sponsored by employers, and ensure guaranteed monthly payments to employees. There was a time when a share of your EPF was transferred to Employee Pension Scheme. It had a set formula and everything, but since September 1, 2014, EPS was discontinued for employees earning more than ₹15,000 a month.

Individual Retirement Account (IRA)

An IRA is a retirement-savings investment account wherein the IRS has imposed an annual contribution limit. These accounts take tax exemptions into consideration which means that they offer tax advantages based on the sort of IRA you pick. You can start drawing money from your IRA once you reach the age of 59 and a half. You will be risking additional tax penalties if you withdraw the money prior to this age.

Traditional IRA

Traditional IRAs are tax-deferred retirement plans, which implies that you contribute pre-tax earnings and don’t pay taxes on the money until it’s distributed. At the time of withdrawal, you are charged at your current marginal tax rate. Annual contribution restrictions apply to traditional IRAs, and you must start taking required minimum payments (RMDs) by the age of 72. The traditional account is also a type of IRA.

Now that you have some knowledge of what falls under retirement planning, you can go ahead and start your very own journey to lead a fulfilling life!

Kotak e-Invest

In this policy, the investment risk in the investment portfolio is borne by the policyholder.

Download Brochure

Features

  • Return of Mortality Charges*$
  • Enhanced Protection
  • Multiple Plan Options
  • Zero Premium Allocation Charges
  • Tax Savings^

Ref. No. KLI/22-23/E-BB/521

T&C

Browse our library of resources

- A Consumer Education Initiative series by Kotak Life

Similar Articles

How to Build a Tax-Free Pension Income for Retirement?

Is it Suggestible to Take a ULIP Plan Linked with a Term Plan?

What is Lock-In Period in ULIPs?

Saving for approaching retirement with retirement insurance

Benefits of Early Retirement Planning in India

Top 6 Flexible Benefits That ULIPs Offer

Top 4 Mistakes To Avoid While Planning For Your Retirement

What are the Advantages and Disadvantages of ULIP?

Importance of financial Planning for Retirement

Know Why You Should Stay Invested in Your ULIP Plan

How Does ULIP Work in India?

Long Term Investment Guide for Your Retirement

Top 4 Myths About ULIP Investments You Should Know

A Beginner's Guide to Understanding 401k Retirement Plan

How Quickly is Fund Switch Effected in ULIPs? Is it Done the Same Day or After a Particular Number of Days?

How To Keep Your Retirement Accounts from Being Hacked?

What is an Annuity Plan, and How Does Annuity Plan Work?

Advantages of Pension Schemes and Retirement Plans

Why Should Retirement Planning Be on Top of Your Priority List?

How Can ULIPs Help You Plan for Your Child's Future?

What Happens If I Stop Paying My ULIP Policy Premium After Paying the First Premium? Will I Still Get The Return?

What is the Minimum Lock-in Period for ULIP?

Is ULIP Better Than FD?

Importance of Retirement Planning

5 Reasons to Buy ULIP for a Secured Financial Future

Why Should You Invest in NPS?

5 Common ULIP Myths That You Should Stop Believing

Calculating a Retirement Corpus that can Support Your Lifestyle

Difference Between Unit-Linked Insurance Plans and Non-Linked Plans

Here's What Retirement Would Look Like 30 Years From Now

How should one decide on fund allocation within NPS?

Important Questions To Ask Yourself Before Choosing A Good Retirement Plan

What are the things to consider before buying ULIPs?

At What Age Should You Start Your Retirement Planning?

Retirement planning with a systematic life insurance plan

Ten Signs That You're Ready to Retire

Why You Should Invest In An Annuity Plan?

Is it Advisable to Withdraw the ULIP Insurance Policy After 5 Years?

Does Having Both ULIP Plan and Other Health Insurance Plan Make Sense?

Here's Why it's a Good Time to Explore ULIPs as an Investment

How to Choose the Best ULIP Plans to Invest in 2022?

8 Charges in ULIP That You Must Know

Retirement Planning Guide: These 5 Steps Will Help You Towards a Safe, Secure and Fun Retirement

Worried About Running Out of Money in Retirement? 4 Tips to Avoid This Crisis

Getting Close to Retirement? Six Key Retirement Planning Tips That Can Help You Retire

यूलिप के फायदे (Benefits of ULIP in Hindi)

यूलिप के 8 शुल्क

What is NAV in ULIP, and How is it calculated?

Is ULIP a Complex Financial Product?

How Much Corpus Does One Need for Retirement?

Why are ULIPs One of the Best Tax Saving Instruments?

How To Calculate The Present Value And Future Value Of Annuities?

What are the Uses of ULIP?

What is the difference between Life Insurance and ULIP?

Types of Annuity Plan | Annuity Definition - Meaning & Key Benefits

What are the Benefits of ULIP - Explained

Which Is Better: ULIP or SIP?

Are You Planning an Early Retirement? Here's Why Buying Annuity Plan Will Make Sense

Is It Worth Buying ULIP Plans For 10 Years?

Retirement: A New Start to Life!

Best Insurance Plans for a Guaranteed Monthly Income After Retirement!

What is a Retirement Plan - What are its Features?

What are ULIPs and their Types?

7 Secrets that can Make Your Post-Retirement Phase Prosperous

Is ULIP a Good Option for People Above 60?

How Is ULIP Different from Other Life Insurance Plans? Where Can I Invest - ELSS, ULIP, or PPF?

5 Notable Investment Options for Retirees

What Are Superannuation Benefits?

Benefits Of Retirement & How Investments Can Help You Enjoy Them

Single Premium ULIP or a PPF - Which One is Better?

What Are Retirement Pension Plans?

Types of Pension Plans for Your Retirement

What are the Differences Between ELSS ULIP and Mutual Funds?

Retirement Planning - How To Calculate Your Retirement Premium in India?

Different Types of ULIP Investments in India

What is ULIP and Its Benefits?

What are the Charges Levied on ULIP?

6 Signs That You Are Not Financially Ready For An Early Retirement

Can NRIs Invest in ULIP Plans Offered in India?

How Do Annuity Options Work In NPS

What is Fund Value in ULIP?

What is the Death Claim Payable in the Case of ULIP?

What To Do With Your Retirement Accounts During An Employment Lapse?

ULIP Tax Benefits: यहां निवेश करने पर मिलते हैं 5 बड़े फायदे

What are the Instruments Available for Building a Retirement Corpus?

Tips to invest your voluntary retirement scheme money

What is Partial Withdrawal in ULIPs?

What tax benefits are there on saving for retirement?

What are the Chances of Losing all my Money in ULIP and How Much Return Should I Expect?

How Safe is it to Invest in ULIP plans?

Why Should I Invest in ULIP?

10 Steps to Figure Out How Much Money You Will Need After You Retire

Understanding Annuity Plans

How can NPS help you save tax?

NPS for Housewife

What is the Difference Between EPF, VPF, and PPF? What are Their Tax Benefits?

Retirement and Pension Plans in India- What are Your Options?

Meaning of Sum Assured in a ULIP

ELSS vs ULIP: Which is a Better Investment?

Pros and Cons of Retirement Annuities

What Happens to ULIP Premiums Paid if the Market Crashes?

Is the ULIP Policy Surrender Value Taxable?

What are the minimum and maximum investment in ULIP? Would the Whole Amount Insured in The ULIP Insurance be Invested in the Market?

What are the 4 Financial Phases of Retirement? How to Budget For Each One?

Benefits of Early Retirement Plans

Un-Retirement - Are You Ready For It?

Why ULIP Should Be a Part of Your Investment Portfolio?

Why Are ULIPs Called Flexible Investments?

What Are Mortality Charges In ULIP?

5 Reasons Why ULIP Plans are One of The Best Retirement Planning Instruments

How To Choose The Right Pension Plan?

Demystifying the Retirement Planning Process

Is it possible to live a financially independent life, even after you retire?

How to Win at Retirement Savings?

Retirement Planning at 50? You Are Still Good to Go

What is the Estimated Return Percentage on ULIP? Do Investors Get Compound Interest?

Is ULIP A Good Investment Option?

The Significance of Number 8,000 in Retirement Planning

Save Early to Keep Living Your Dreams Post Retirement

5 Steps to Gift a Smart Retirement Plan to Your Parents

ULIPs or Pension Plans – Which is a Better Retirement Plan?

Top Investment Options for Retirement Planning

Do ULIPs Give Good Returns On Investments?

Different Types of Retirement Schemes

How Does Pension Plans in India Works?

10 Steps to Figure Out How Much Money You Will Need For Your Post Retirement Plans

ULIP Plan or Traditional Insurance Plans - Which is better?

How Can I Achieve My Wealth Goal with ULIP Investment?

Who Gets the Benefit After the Maturity of ULIP: The Proposer or The Life Insured?

Types of Retirement Plans

Give Your Retirement Savings A Booster-Shot with Annuities

FAQs on Taxation of ULIPs

Which are the Best ULIP Plans in India for Children?

Do Pension Plans Allow any Death Benefits?

Are Annuities Great For Early Retirement?

Looking for Ways to Earn Lifetime Income in Retirement? Here Are 6 of the Top Options

How Has NPS Performed in Comparison with Other Instruments?

Retirement Planning for Millennials

Why Should You start Retirement Planning as soon as you start a job?

A Quick Guide to Retirement Plans

How To Make Most of Your Money After Retirement?

What are the Rules for Exit From NPS?

How has ULIP Grown Over the Last 3 years?

ULIP: Can You Surrender ULIPs or Withdraw Money from It?

Top 6 Reasons Why You Should Get A Pension Plan

Inflation: A Key Factor to Consider into Retirement Planning

Retirement Planning Guide for Working Men and Women

What is Premium Redirection in ULIPs Plans | ULIP Insurance Plans | Kotak Life Insurance

Annuity Plan | How to Choose the Right Annuity Plan | Kotak Life

Invest for your second innings with a guaranteed savings plan

What are the Maturity Benefits in a ULIP Plan: Fund Value Sum Assured or Only Fund Value?

How Does NPS Work?

Can I Surrender My ULIP Policy after 2 Years?

5 Retirement Planning Tips for a Financially Controlled Post-Employment Life

Which Pension Plan Suits You best?