Pension FundLic Pension Plan
What are the pension plans?
Pension plans are retirement oriented life insurance plans. They aim to create a retirement corpus and provide you with a source of regular income even after you have stopped working. There are two types of pension plans. Let’s understand each type to know exactly what pension plans promise –
1.Deferred annuity plans
These plans are those which allow you to accumulate a retirement corpus over a period of time. You can invest in deferred pension plans when you are working. The premiums that you pay would accumulate into a corpus which you would get when the plan matures. On maturity, the corpus accumulated promises to pay you lifelong incomes.
2.Immediate annuity plans
These plans are for those who have a lump sum amount in hand and want to receive periodic fixed incomes from the amount. Immediate annuity plans promise lifelong annuities at a fixed rate thereby providing you with a non-stop source of income.
Benefits of pension plans
Pension plans promise the following benefits to policyholders –
a.They create an earmarked corpus for retirement savings which comes in handy after you retire.
b.Deferred pension plans are also offered as unit-linked insurance plans. Through these plans, you can create a substantial retirement corpus as you would earn market-linked returns.
c.Premiums paid towards pension plans are allowed as a deduction under Section 80CCC of the Income Tax Act. You can claim a deduction of up to INR 1.5 lakhs and lower your tax liability while planning for retirement at the same time
d.Immediate annuity plans pay guaranteed incomes lifelong allowing you to meet your expenses after retirement.
e.Joint life annuities are also available under immediate annuity plans which pay annuities for yourself and your spouse too.
f.Deferred annuity plans give you 1/3rd of the accumulated corpus as cash when the plan matures.
g.This benefit is tax-free and you can use the benefit for any financial need.
