.gif)
.webp)
.svg)
Touted as the golden years of life, retirement is the time to do things missed due to professional and personal commitments in your working life.However, to ensure a stress-free retired life , it’s important to build an adequate corpus and a regular stream of income. In this blog, we will tell you about three retirement schemes in India that can help you to do so. Let’s begin.
- Plans sponsored by insurers that invest in debt instruments
- Unit-linked instruments that invest in both equity and debt
- National Pension Scheme (NPS) A government-sponsored pension scheme, NPS is a central government initiative open to all employees in the private, public and unorganized sector. Through this scheme, you can invest in a pension account regularly during your working life.NPS offers you two ways to invest – active choice and lifecycle funds. In active choice, you have the liberty to choose your own asset mix. On the other hand, in lifecycle funds the asset mix changes as you grow older.At the age of 60, you can withdraw 60% of the accumulated corpus as a lump sum, while the remaining 40% needs to be invested in buying an annuity, providing you with a monthly pension. Budget 2019 has proposed to make this 60% withdrawal completely tax-free.
- Pension Plans Also known as retirement plans, pension plans allow you to invest a certain portion of your income in them to have a regular source of income post-retirement. Pension plans in India have two phases – accumulation stage and vesting stage.In the accumulation stage, you pay an annual premium towards the plan while in the vesting stage, you will start receiving annuities. There are different types of pension plans available in India, such as:
- Senior citizen savings scheme (SCSS) If you are above 60, you can invest in a senior citizen savings scheme or SCSS. A government-backed initiative, it offers you a regular source of income during your post-retirement years. As an individual, the maximum amount which you can invest in SCSS is Rs.15 lakhs or the amount received as a retirement benefit.You can open an SCSS account in any bank or post office in India. The tenure of this scheme is 5 years, which can be extended by another 3 years. The Government decides the rate of interest and this is subject to change.
The scheme also allows you to make a nomination and make premature withdrawals. You can prematurely withdraw from the scheme only after the completion of a year of opening the account.
To sum up
Retirement is an essential life goal, which requires meticulous planning. Generally, experts advise planning it as early as possible to ensure you have a large reservoir of funds by the time you hang up your boots. Prudent investments can help you achieve this important milestone with utmost ease.
DISCLAIMER
The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.