What is a Pension Plan?
A pension plan is an investment option designed for your post-retirement life. It allows you to save money either through a one-time lump sum or regular payments over time. These plans guarantee a steady income after retirement, ensuring a secure financial future. By contributing consistently during your career, you can build a significant fund for your retirement needs.
Annuity plans ensure a stable income stream during retirement. You either pay a lump sum or regular premiums, and the insurer provides periodic payouts, such as monthly or yearly income. These plans are ideal for retirees looking for predictable and guaranteed income. However, annuity payouts are taxable as per your income tax slab.
Types of Annuity Plans:-
- Immediate Annuity –
- Provides regular income immediately after payment of a lump-sum amount.
- Guaranteed Income is provided immediately for life.
- Policy nominee receives the money in case of your unfortunate demise during the policy tenure.
- Premiums paid towards immediate annuity scheme are tax-exempted as per Income Tax Act, 1961.
- Deferred Annuity –
- Guaranteed income plans where money can be invested as a lump-sum or in form of regular payout.
- Guaranteed income starts after the Deferment Period ends.
- Policyholder has the option to add their spouse where they continue to receive the same pension post their demise.
- Income is guaranteed for Life.
- Annuity Certain / Guaranteed Period Annuity –
- You receive regular annuity payments for a specific number of years, chosen by you.
- If you pass away before receiving all complete payments, the annuity is paid to your beneficiary.