Different Types of Pension Plans available in India


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Retirement a new phase of the life of an individual is opened up. You can check off things from my bucket list since you have the time now and for doing so you need adequate fun so that you don’t have to compromise on your lifestyle during those post-retirement years. In the absence of a regular source of income, you have to rely entirely on your savings and investments.

By the time you retire, the living costs will certainly rise. you also need to take into account the medical emergencies and some other unforeseen expenses. Therefore, in order to find their old age expenses, you need to plan carefully.

Pension funds can provide a supporting income, letting you enjoy all the financial freedom you need in your retiring years.

Pension funds

Pension funds are those financial tools that help you in accumulating funds for post-retirement years. by investing a certain amount regularly towards your function fund you will easily build up a considerable sum in a face by face manner. The two stages are:

  1. Accumulation stage

 you have to pay a specific amount regularly until you retire

  •   Vesting stage

 at the time you retire, you get a constant flow of income for life

Types of Pension funds in India

National Pension Scheme

The national pension scheme or NPS is introduced by the government of India as a financial question for retired people. Some of its features are mentioned as follows:

  • The least some you must invest is Rs 1000 there is no upper limit
  •  you have to invest in the scheme and till the age of 60 years
  •  on retirement, you can withdraw 60% of the savings
  •  the money  will be invested and debt and equity funds based on your preference
  •  the returns will be dependent on the performance of the funds you have chosen
  •  you must use the remaining 40% of savings to buy an annuity which is a retirement plan offering periodic income.

Employee Provident Fund

Employee Provident Fund or EPF is a type of government saving platform for salaried employees. Both you and your employer know how to make an equal contribution towards your EPF account. Your share of contribution is deducted from your salary every month. The interest rate on investment is set by the Employees Provident Fund Organisation or EPFO. Once you retire you will receive the fund contributed by you and your employer along with the accrued interest.

Public Provident Fund

Public provident fund or PPF is a long-term investment scheme with a tenure of 15 years. Therefore the impact of compounding is huge, especially towards the end of the term.

Each year you can invest a maximum amount of Rs 1.5 Lakh into your PPF account. You can either pay upfront or through twelve instalments scattered over the financial year. Your PPF investments are eligible for tax deductions under Section 80C of the Income Tax Act.

The interest rates on PPF are set by the government every financial quarter, based upon the profits from government securities. These Public Provident Funds are not market-linked.

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