Every individual aspires for a peaceful retirement. In order to spend retirement in serenity, one should have a proper plan or a dedicated fund which can fulfil all the retirement needs.

Pension plans also known as retirement plans, look after the monthly pension needs of the retirees. These pension plans are designed in such a manner that they extend benefits to the individuals after 60 years of age by replacing the income of the individuals in the golden years.

Advantages of Pension Plans

• Provides an option to invest in equity, debt or government securities.
• Provides a fixed amount of money every month thereby replacing an individual's income
• Flexible payout of pension
• Eliminate the risk of relying on someone else for money

Do I Need to Have A Pension Plan?

Well, it is true that one should live and enjoy his present life to the fullest; however, thinking about one's own future in advance is not at all a bad idea and hence one should start investing as early as possible.

One should earmark a little portion of his monthly income and invest it toward his retirement either through mutual funds or by buying top pension plans in India.

If an individual has the capacity to bear calculated risk then he may build his retirement corpus through mutual funds as well. The reason being that equity mutual funds generate superior returns over any other asset class in the long term and are a perfect investment vehicle for one's retirement.

Which Are the Top Pension Plans In India?

Planning through mutual funds

Mutual funds provide one of the best ways of planning one's retirement. Since these are capable of generating superior returns over a period of time, an investor is able to build a large retirement corpus. Moreover, in order to receive regular monthly income, an investor can invest the whole accumulated corpus in a hybrid mutual fund at 60 years of age and can opt for SWP (systematic withdrawal plan) for receiving regular income.

NPS (National Pension Scheme)

Another option of getting the pension in retirement days is by contributing to the NPS scheme which is offered by the Government of India to all the nationals. There are two types of accounts offered under NPS scheme:- Tier I and Tier II account. Out of which a minimum contribution has to be made in Tier I account while investment in Tier-II account is optional. The main reason behind the low popularity of NPS among investors is that on maturity one has to compulsorily buy an annuity with at least 40% of the accumulated corpus.

PPF (Public Provident Fund)

PPF is the delight among most of the investors because of the tax-saving benefits it offers. This scheme enjoys EEE tax status which is why most of the investors prefer PPF as their retirement planning tool. However, they do not realize that these schemes offer meagre returns which are not sufficient for building a large corpus. Hence, one will be better off if he opts equity route for building his retirement corpus.

Further Reading:

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