5 TOP PENSION PLAN TO INVEST IN 2020

Pension plan

5 TOP PENSION PLAN TO INVEST IN 2020

A pension plan is not just future planning but is also about independent life and financial freedom. Every one of us will get old and at that age, we cannot work as we did in our young age. So it is very important that we should have a passive source of income to sustain.

Whole-time you worked for yourself, family and friends to provide them security and financial assistance. Have you planned for your own and wife security when you will get old? Your children may or may not look after you.

Even if they did look for you, you may feel uncomfortable asking them for help. A pension plan is not just future planning but is also about independent life and financial freedom.

Every one of us will get old and at that age, we cannot work as we did in our young age. So it is very important that we should have a passive source of income to sustain. Whole-time you worked for yourself, family and friends to provide them security and financial assistance.

Have you planned for your own and wife security when you will get old? Your children may or may not look after you. Even if they did look for you, you may feel uncomfortable asking them for help.

Pension Plan 2

Also, what about those trips you have promised your wife to travel after 60. Retirement is like a long vacation. After all the hard work you did at your young age now it’s time to have some rewards. All this is possible with investing only 10% of your salary in the pension fund.

WHY INVEST IN PENSION PLAN?

Pension plan provides a regular income and your family can maintain its lifestyle event if you stop working. The earlier you start, more compounding interest you will receive. Choosing the right pension plan is very important to ensure a secure retired future for you and your wife. 

Having a balanced fund combined of equity and debt help you earn above average return as the market trend remains bullish for long period.

A pension plan must have a minimum guarantee. For ensuring minimum guarantee you must invest in at least 5 pension plan and diversify the fund accordingly. 

From age 24 to 44 you should have a large proportion of premium inequity at least 70% and 30% in debt. And form age 45 to 60 you must have 80% in debt and remaining in equity.

You can choose the exact date on which you want to start receiving your pension and most place comes with insurance cover and health cover. Insurance companies offer a pension plan of two categories  a. Immediate annuity. b. Deferred annuity.

An immediate annuity is where you invest a lump sum amount at an early age and you will receive regular income in exchange for it. Compounding will grow your investment, so it is important to invest at an early age.

A deferred annuity is where you invest regular smaller part for your income in the form of recurring and after that, you will start receiving regular income. We will discuss tax benefits on pension plans in a different article. 

These are the top 5 pension plan you should start investing in 2020.

LIC JEEVAN AKSHAY

  1.   It is an immediate annuity plan, can be purchased lump sum.
  2. No medical check-up required 
  3. Paid at simple interest of 3% pa
  4. Minimum purchase price of 150000 through online mode.
  5. Minimum entry age required is 30 years
  6. Tax exemption on the amount invested

This is guaranteed annuity plan

HDFC - Click2retire

The linked insurance products do not offer any liquidity benefits during the first five years of contract and policyholder may not be able to surrender the monies until the end of the fifth year.

Features 

  1. No hidden charges
  2. Gain from the upside in the market
  3. Can start at age 18 
  4. Assured vesting benefits 
  5. The plan provides the death benefit because of which your nominee will receive a higher value than policy fund value.

Some benefits are guaranteed and some benefits are variable with returns based on the future performance of insurance company.

SBI LIFE - RETIRE SMART

This is the unit-linked pure pension plan and is subjected to market risks.

Benefits

  1. In the unfortunate event of the death of the Life Assured, Higher of (Fund Value plus Terminal Addition or 105% of total premiums paid till the time of death), is payable.
  2. Guaranteed addition of up to 210% of the annual premium. (only for 35 years policy)
  3. Option to pay premium regularly or for a limited period of time.
  4. Entry age minimum of 30 years.

BAJAJ ALLIANZ PENSION FUND

 Bajaj Allianz assured guaranteed pension for the policyholder during his or her lifetime. 

Benefits

  1. Minimum entry age is 37 years and maximum age of 80 years.
  2. To get to choose six annuity options
  3. The minimum annuity can be purchased as low as Rs. 25000 and no maximum limit.
  4. Minimum annuity instalment of ₹1000 to maximum ₹12000.

All the above pension funds offer you simple interest @ 4% on average. But we can achieve more if we start investing in our own flexible plan.

From age 24 to 34

Invest ₹ 5000 with a large proportion of investment in stocks and a small proportion of debt funds. You can take the risk at this age, but you should know where are you exactly investing 

Exposure under this age should be Equity -₹3000

Mutual fund (CSIP fund only) – ₹1000 Bonds or Debentures- ₹1000.

From age 35 to 50

Invest ₹ 8000 with a small proportion of investment in stocks and a large proportion of debt funds. You can take the risk at this age, but you should know where are you exactly investing 

Exposure under this age should be Equity -₹2000

Mutual fund (CSIP fund only) – ₹2000 Bonds or Debentures- ₹4000

From age 51 to 60

Invest ₹ 10000 large proportion of debt funds only. You can take the risk at this age, but you should know where are you exactly investing 

Exposure under this age should be 

Mutual fund (CSIP fund only) – ₹1000 Bonds or Debentures- ₹9000.

You should be aware of managing your own customised pension fund. Self-discipline and patience are very important while managing pension fund. If you have a habit of speculating stocks, you should not invest in the customised fund. Choose any top four pension funds from above.

Do you know any pension fund which can benefit readers on our blog? Please comment below I will credit you and include your point in this article.

I am neither an investment adviser nor a stockbroker to provide recommendations and none of my answers is to be construed as buy/sell recommendations. All I am doing is, showing the facts analysis and transparency.