Retirement Solutions

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Retirement Plans are also known as Pension plans; are investment plans in which part of savings are set aside to accumulate over a period of time to provide steady income after the retirement, when one requires it the most. Investment in these plans help you secure your current lifestyle after your retirement.

You have been saving diligently for retirement. That's good, but in all likelihood you have a vague idea about what you want and not a concrete plan. That's bad, for this means you will make several mistakes as you set out on the road to gifting yourself a comfortable life after retirement.

Pension plans provide you with financial security for a happy post-retirement life without compromising on your living standards. Rising inflation & high cost of living has made retirement planning an important aspect of financial planning. Our retirement plans provide you with an option to choose your retirement age and to control the way your investments are managed to meet your retirement needs.

Necessity of Retirement Plan in Your Life

Even if a person has accumulated good amount of savings over working life, a retirement plan is imperative; savings get exhausted very fast and are sometimes used in emergencies. Selecting the best retirement plan helps you secure your cash flow for meeting basic daily needs post retirement. When you continuously invest in retirement plans the amount grows manifold due to the compounding effect which makes a lot of difference to your final savings corpus. Best pension plan lets you plan for retirement in a phased manner.

Investing in the right retirement plan helps you secure your cash flow for meeting basic daily needs post retirement. Even if you have saved a good amount in your working life, Investment in a retirement plan is still necessary as savings may get exhausted very fast in case of emergencies. The amounts saved steadily in retirement plans, grows due to the compounding effect of money which helps you create a big corpus for your final savings.

Benefits of Pension Plans
  • Minimum Guarantee: Mandated by law every pension plan has a minimum guarantee. As per IRDA guidelines, there should be “non-zero returns” on all premiums or guaranteed maturity benefits.
  • Tax benefits: As per extant tax laws, this plan offers tax benefits under Section 80CCC and Section 10(10A) of the Income Tax Act, 1961, subject to fulfilment of the other conditions of the respective sections prescribed therein.
  • Commutation up to 1/3rd of the Vesting Benefit is allowed and the amount can be received in a tax-free lump-sum

Types of Retirement Plans

Immediate Annuity:

In an immediate annuity plan, pension begins immediately. In this type of pension plan lump sum amount has to be deposited and pension begins immediately.

Example is : BSLI Immediate Annuity
Deferred Annuity:

In deferred annuity plan the corpus is accumulated over time steadily through regular premiums or single premiums over a policy term. The pension begins after the policy term is over.

'With cover' and 'without cover' plans

The ‘with cover’ pension plans have life cover component in the plan. This implies that on the death of the policyholder, a lump sum amount is paid to the family members although the cover amount is not very high since a large part of premium is diverted towards growing the corpus rather than covering for life risk. The ‘without cover’ pension plan implies that there is no life cover. Presently, deferred annuity plans are ‘with cover’ and immediate annuity plans are ‘without cover’.

Why Retirement Planning?

To achieve your various life-stage goals and to maintain your desired lifestyle during your retirement years, you need to make prudent investments during your working years, putting your hard earned money to work for you in your golden years.

Saving and Investing for Retirement: It is never early

The goal of retirement planning is to help achieve your financial dreams both during your working years and post retirement. Most people, particularly those in the early stages of their career, think retirement is too far to worry about. Planning for retirement often features last in our priorities, after planning for children's education, marriage, home-buying and even holidaying. While you may have decades to go before you retire, it’s never too early to start planning and setting aside savings for retirement.

Take for example an average middle class person like Ramesh who is 25 years old, single with no dependents. He would be able to comfortably manage his standard of living with about Rs. 25,000 a month. But 3 years down the line, this would go up to Rs. 50,000 per month. If Ramesh retires at 60 years, assuming inflation at 8% per annum, his total retirement budget would work out to be a whopping Rs. 1.03 crore per annum and Rs. 8.6 lacs per month.

8 Important Questions to Consider when Planning for Retirement
  • When should I retire?
  • How much retirement corpus will I need?
  • How can I ensure a regular retirement income?
  • What type of investments should I make?
  • What will be the tax implications of the investments?
  • How will I meet my housing needs?
  • How will I meet my children’s needs for higher education and marriage?
  • How will I provide for increasing healthcare costs during old-age?

Some examples of retirement plans are BSLI Empower Pension PlanBSLI Empower Pension - SP Plan

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