How do you select the best pension plan India? A decent amount of planning or homework is necessary for this purpose. After all, selecting a pension plan is a big life step since it will directly impact how comfortable you are after you retire. You should thus keep a few pointers in mind.
Selecting the Best Pension Plan in India for Your Needs- What to Consider
Before going deeper into the pointers that you should remember while choosing pension plans, it is imperative to state that you should start as early as possible. Investing early will help you benefit from compounding your returns. It will also lower the financial burden in the last few years of your professional career.
- Always choose pension plans that allow you to invest in a wide range of options, i.e. market-linked equities, debt funds, and other instruments along with some comparatively low-risk investments as well.
- The pension plan should enable you to save and invest for a long duration while flexibly selecting the vesting or retirement age.
- In case you will get a lump sum at retirement, then look for a plan where you can invest this amount and instantly start getting returns in the form of a monthly pension.
- There should be some minimum guarantees for the principal that you invest in the pension plan. Or it should be a mix of high and low-risk investments to safeguard your basic returns.
- There should be options for investing in both debt and equity in a balanced manner as per your preferences and risk appetite.
- Additional life coverage options should be present with the pension plan in case you are investing for the long haul.
- You should have the option to flexibly pay premiums for the plan as per your preferred schedule, i.e. monthly, quarterly, or annually. You should also be able to scale up your investments with increases in income.
The Best Pension Plan is One Tailored to Your Needs
While keeping an eye on the above-mentioned aspects is important, do not forget that there is a strong element of customisation that you should keep in mind. Your risk appetite/tolerance will undoubtedly influence the final decision that you make in terms of choosing a pension plan. Your life stage will also influence how you manage the plan. When you are younger, you can afford to invest in market instruments with slightly higher risk levels and shift more towards low-risk options as you get older.
Another thing worth remembering is the tax benefits of investing in the plan. The fees and charges for the plan are also worth looking at closely before you choose. Some of the top options include dedicated retirement plans offered by insurance companies and ULIPs. Weigh all the options carefully and keep the above-mentioned pointers on your checklist before making a final decision.
