Navigating Pension Schemes: Simple Steps for a Stress-Free Retirement

Navigating Pension Schemes: Simple Steps for a Stress-Free Retirement
Navigating Pension Schemes: Simple Steps for a Stress-Free Retirement

If you plan for everything in your life, then why does retirement take a backseat? Planning for retirement is important. But where do you begin? How do you invest? How much do you invest? All of these questions are valid and correct. To address them, let’s learn and understand the pension scheme. 

Firstly, you must understand what a pension scheme means. It is a retirement plan that helps you build a corpus for retirement. This ensures financial stability via passive returns, taking care of your lifestyle expenses. 

Let’s understand the various pension schemes available in the market: 

  1. ULIP-based pension scheme: 

A ULIP-based pension scheme offers the advantage of investing money in a dual-benefit policy. This pension scheme targets capital appreciation with investment in equity, debt, or a hybrid mode based on your needs and provides life coverage. 

The duration for a ULIP pension scheme is around 30 to 40 years, and your premium payable begins from around ₹24,000 per annum. 

  1. National pension scheme: 

This is a government pension scheme. It operates very much like a private offering and delivers growth across a longer term of investment. The returns that you see are primarily around 15 to 20% CAGR. These are dependent on market returns, but the benchmark performance has been in this range. 

This is a pension plan that offers both annuity and deferred annuity options. The annuity options give you the freedom to choose. You also have the option to have a higher annuity. This pension scheme ensures that you have a passive income at the age of 30. Your annuity payment can be quarterly, half-yearly, or annually. 

  1. Traditional pension scheme: 

This pension scheme can be begun once you are 18 years of age. You get an assured retirement corpus with disciplined investing. You also get bonuses for revising the pension plan with your insurance service provider. There is an option for you to get coverage for your entire life. Tax benefits also await when you invest in a traditional pension plan. 

With a preliminary introduction to the types of pension schemes available in the market, let’s discuss how you can plan for retirement with these plans. 

  1. Your ideal retirement plan should include your risk appetite, income, lifestyle needs, and other similar factors. The primary rule is that your retirement corpus should be at least 12 to 15 times your last drawn or expected annual income. 
  2. Your risk appetite reduces as you age. So it’s ideal to have a portfolio that is more focused on debt investments as they are less risky than equity investments.
  3. Get comprehensive medical insurance to cover your medical needs. Health treatments are getting more expensive, which can drain your financial resources. 

You can start this journey by investing wisely, making better money management choices, and choosing plans that deliver the most benefits. But do not wait for long. You stand to benefit, the earlier you choose a plan.

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