Saving money has always been important. While the world is constantly changing, the pace at which these changes have taken place has been particularly fast since 2020 and the onset of the Coronavirus pandemic planning for your financial future is pertinent as it can allow you to focus on your, desired life goals.
Types of pension plans
Deciding how to allocate funds for your future can be a tough feat. However, making a concrete plan for the same is prudent as it allows you to rest easy during your later years. Retirement years are meant to be stress-free and setting aside hard-earned money in a pension plan can prove to be rewarding in the future. Presently, there exists a wide range of pension plans available in the market. Some of the more popular ones have been examined below.
National Pension Scheme allows those who avail of it to receive a regular pension once they retire. They allow for policyholders to contribute to their pension account while they are still involved in their careers. Policyholders’ funds are invested in debt and / or equity markets based on preference. Once policyholders turn 60, they are entitled to withdraw some of their investments and use the remainder to purchase an annuity which provides them with a regular income.
Pension Funds require policyholders to invest a certain amount for a certain timeframe in the fund of their choice. Available funds cater to a wide variety of investor preferences. The investment’s value increase complements the increase in the fund’s value. Once policyholders retire, they are entitled to withdraw all their money from the plan or receive it in the form of a regular income.
Annuity Plans require policyholders to invest lumpsum amount of money or pay premiums in regular intervals which are invested by the plan provider on the policyholder’s behalf. Once retired, policyholders are entitled to withdraw the entire sum of money in one go or receive it in the form of a stable income. Annuity plans are available in two different forms – immediate and deferred each of which has been discussed in detail below.
What is an immediate annuity plan?
Immediate annuity plans provide their policyholders with monthly or annual annuity immediately after investments have been made by the policyholder. Payments provided continue for a specified time frame or may carry on across the policyholder’s lifetime.
With the support of an immediate annuity plan, policyholders are able to secure a steady stream of income for their partners even if they happen to not be present in the future.
Investing in this form of a plan is suitable for those seeking regular annuity payments. The rate of return on annuities varies and is based on the annuity plan selected by the policyholder.