Pension plans in India are designed to provide financial security after retirement. They help you save and invest regularly during your working years, ensuring a steady income when you retire. There are different types of pension plans, including guaranteed and market-linked options, allowing you to choose based on your risk appetite.
Peaceful Post-Retirement Life
Tax Free Regular^ Income
Wealth Generation to beat Inflation
A pension plan is an investment option that helps you save for retirement and ensures a steady income when you stop working. During your working years, you contribute regularly to the plan, and this money grows over time. Upon retirement, the accumulated funds are paid back as a regular pension, providing a reliable source of income.
Pension plans provide financial security, allowing you to maintain your lifestyle and meet expenses after retirement. They are essential for a stress-free and comfortable life in your golden years.
The primary purpose of a pension plan is to ensure a stable income after retirement and act as a financial backup during emergencies if savings fall short.
Learn the workings of a pension plan in India with a simple explanation from the following:
You pay premiums, and the money is invested in a fund or asset of your choice until the plan matures.
This is when the accumulation phase ends, and you are eligible to start receiving the pension. You need to invest a certain portion of your fund value in an annuity plan which gives you a regular income for life and the remaining fund value can be withdrawn.
The vesting age is the age when you start receiving the monthly pension from your retirement plan.
You can stop or surrender your plan before vesting age, but you may get a reduced surrender value. Discontinuing your premium payments may affect your pension benefits and lead to policy lapse or reduced payouts.
Have a look at the key benefits offered on purchase of a pension plan online:
An annuity is the fixed amount you will receive each year throughout your life tenure on the purchase of an annuity Plan. The annuity can be immediate or deferred, depending upon the nature.
The sum assured is a definite amount offered to the nominee of the selected best pension plan at the end of the plan tenure. It is generally 10 x of the annual premium or the fund value of the policy. You can also choose to buy a Pension plan without any sum assured.
The surrender value of a pension plan is the amount the insurance company will pay you if you surrender the plan before its maturity.
Pension plans provide various options for premium payment (lump sum or periodic) and annuity payouts (monthly, quarterly, or annually).
Retirement plans may or may not include life insurance coverage based on the choice of the customer. In case the customer opts in for risk cover, it provides financial security to dependents.
Premiums paid qualify for tax deductions under Section 80C, and maturity proceeds can avail of tax-exemption under Section 10(10D) of the Income Tax Act, 1961. For Pension plans without risk coverage, the customer gets tax-free maturity under section 10(10A) and Section 26AB.
A wide range of the best retirement plans in India are available to cater to your various requirements.
Let us explore the following plans in detail:
Pension plans are designed to provide financial security after retirement. They allow you to save regularly during your working years to offer a steady income for a worry-free retirement. These investment plans also provide tax benefits under Section 80C and 10(10D), making them a smart choice for long-term retirement planning.
These retirement plans are further classified based on the plan structure and benefits.
| Pension Plan | Description |
| Whole Life ULIPs | -Money stays invested in the market-linked funds for your entire life. -Partial withdrawals are allowed upon retirement, providing tax-free income. -Additional withdrawals can be made as needed. |
| Pension ULIP | -Plans where the money stays invested in market linked funds. -These plans does not require any medicals as there is no risk coverage. -On maturity 60% can be withdrawn tax-free and 40% needs to be invested in an annuity which gives guaranteed income for life. -Offers flexibility to surrender the policy anytime after 5 years. -Such plans offer partial withdrawal allowed based on certain criteria. |
| Pension Funds | -Long-term pension scheme regulated by the Government under the Pension Fund Regulatory and Development Authority (PFRDA). -Offers better returns upon maturity compared to other savings plans. -You can withdraw an amount from your pension fund during the contribution stage in case of emergencies, providing you with financial stability. |
| Defined Benefit | -This pension plan guarantees a specific retirement income for life. -Calculation under Defined Benefit Plans are based on earnings and years of service with the employer. |
| Defined Contribution | -Retirement income is not guaranteed, but contributions are guaranteed. -Both you and your employer can contribute to this retirement plan. -Retirement amount depends on contributions and investment returns. |
| National Pension Scheme (NPS) | -Introduced by the Government of India to secure the financial future of the government and private employees after retirement. -Money in the NPS scheme is invested in equity and debt funds to generate returns on investment. -60% of the amount can be withdrawn at retirement, while the remaining 40% is used to purchase an annuity. -Maturity proceeds are not tax-free. -You can use the NPS Calculator to easily calculate your potential returns from the scheme. |
| Employees' Provident Fund (EPF) | -Mandatory savings plan for salaried employees; -Both employer and employee contribute; -Withdrawal allowed under specific rules. |
| Public Provident Fund (PPF) | - A government-backed savings scheme with a 15-year lock-in period. - It offers fixed returns that are completely tax-free under Section 80C. - Allows partial withdrawals during emergency situations after 7 years of regular investment. - Ideal for long-term goals like retirement or child education. |
| Atal Pension Yojana (APY) | - Provides fixed monthly pensions ranging from ₹1,000 to ₹5,000 after retirement. - Targeted at workers in the unorganized sector, with flexible contributions. - Pension starts at age 60, with government co-contributions for eligible subscribers. - Spouse continues to receive the pension after the subscriber's demise. |
| Retirement-Focused Mutual Fund Schemes | - Market-linked funds with a 5-year lock-in, combining equity and debt investments. - Equity portion aims for high long-term returns; debt portion provides stability. - No guaranteed returns are offered, but potential for higher growth compared to traditional plans. - It is a tax-efficient option for disciplined retirement planning. |
Annuity plans ensure a stable income stream during retirement. You either pay a lump sum or regular premiums, and the insurer provides periodic payouts, such as monthly or yearly income. These plans are ideal for retirees looking for predictable and guaranteed income. However, annuity payouts are taxable as per your income tax slab.
Let us discuss about different types of annuity plans belows:
| Annuity Plans | Details |
| Immediate Annuity | -Provides regular income immediately after payment of a lump-sum amount. -Premiums paid towards immediate annuity scheme are tax-exempted as per Income Tax Act, 1961. - Guaranteed Income is provided immediately for life. -Policy nominee receives the money in case of your unfortunate demise during the policy tenure. |
| Deferred Annuity | -Guaranteed income plans where money can be invested as a lump-sum or in form of regular payout. -Guaranteed income starts after the Deferement Period ends. - Income is guaranteed for Life. -Policyholder has the option to add their spouse where they continue to receive the same pension post their demise. |
| Annuity Certain / Guaranteed Period Annuity | -You receive regular annuity payments for a specific number of years, chosen by you. -If you pass away before receiving all complete payments, the annuity is paid to your beneficiary. |
Pension plans are essential for a financially secure retirement. They offer guaranteed regular payouts, tax benefits, and annuity options. The right retirement will help ensure a peace of mind and support your financial independence during retirement.
The following list will help you to choose the best pension plan among various best investment plans:
| Pension Plans in India | Entry Age | Maturity Age | Policy Term (PT) | Minimum amount to Invest (yearly) | |
| Tata AIA Fortune Maxima | 18 – 60 years | 100 years | 100 minus issue age | Single: Rs. 25,000; Limited: Rs. 12,000 p.a. | Get Details |
| Max Life Online Savings Plan | 18 – 60 years | 85 years | 5 – 52 years | Rs. 12,000 p.a. | Get Details |
| HDFC Life Click 2 Wealth | 18 – 60 years | 18 – 99 years of age | 20 – 64 years | Rs. 12,000 p.a. | Get Details |
| Max Flexi Wealth Advantage Plan | 18 – 50 years | 18 – 75 years | 10 – 40 years | Rs. 24,000 p.a. | Get Details |
| Bajaj Allianz Life LongLife Goal | 18 – 65 years | 99 years | 99 years minus Entry age | Rs. 25,000 p.a. | Get Details |
| ICICI Prudential Life Signature | 18 – 60 years | 18 – 75 years | 10-30 years | Rs. 30,000 p.a. | Get Details |
| HDFC Life Smart Pension Plan | 25 - 70 years | 40 - 80 years | 10 - 55 years | Rs. 30,000 p.a. | Get Details |
| ICICI Prudential Signature Pension | 25 - 65 years | 40 - 80 years | 20 - 55 years | Rs. 60,000 p.a. | Get Details |
| PNB Goal Ensuring Multiplier | 18 – 60 years | 99 years | 39 – 99 years | Rs. 18,000 p.a. | Get Details |
| Canara Promise4Growth - Life | 18 – 60 years | 18 – 80 years | 10-30 years | Rs. 12,000 p.a. | Get Details |
| Kotak E-invent - Retire Rich Plan | 18 – 50 years | 28 – 60 years | 10/ 12/ 15/ 20 years | Rs. 24,000 p.a. | Get Details |
| Edelweiss Life Tokio Wealth Secure Plus | 18 – 60 years | 18 – 70 years | 5-25 years | Rs. 24,000 p.a. | Get Details |
| Tata AIA Fortune Guarantee Pension | 18 – 75 years | 40 – 85 years | 5 – 15 years | Rs. 12,000 p.a. | Get Details |
| Max Life SWP – Long Term Income Plan | 18 – 60 years | 60 – 85 years | 60 – 80 years minus Entry Age | Rs. 11,000 p.a. | Get Details |
Disclaimer: Policybazaar does not endorse, rate, or recommend any particular insurer or insurance product offered by an insurer. The tax benefit is subject to changes in tax laws. *Standard T&C Apply.
Following are the details of the best pension plans by insurance companies:
The Tata AIA Fortune Maxima is a participating Unit-Linked Pension Plan (ULPP) offering life insurance cover and market-linked returns.
Get life insurance coverage up to age 100 for your family's security.
Choose from multiple funds or the Enhanced SMART strategy for your investments.
Add optional riders to your ULIP policy for greater protection.
A unit-linked, non-participating traditional investment plan that provides both life cover and wealth creation benefits.
Death benefit of the highest of Sum Assured, 105% of premiums paid, or Fund Value on death under Variant 1.
Under Variant 2 Immediate lump sum, Family Income Benefit, total Fund Value at term end, and company-funded premiums after death. Higher death benefits, lower returns.
Unlimited free fund switches, no Premium Allocation or Policy Administration charges. Only Mortality and Fund Management charges apply.
A participating Unit-Linked Pension Plan (ULPP) with guaranteed life cover and loyalty additions.
Receive a special addition of 1% of annualized premium for the first 5 years.
Get Mortality Charges back on maturity.
Choose from 13 fund options with unlimited free switching if you opt for the Premium Waiver.
A Unit Linked Insurance Plan (ULIP) designed to help you build a wealth portfolio for you and your loved ones for regular income during retirement.
Guaranteed loyalty additions to your fund from the 8th year.
Choose between Wealth and Whole Life plans, various premium and policy terms, 5 investment strategies, and 12 funds.
Change your investment style anytime with unlimited free switches and premium redirections.
A non-participating Unit-Linked Pension Plan (ULPP) with guaranteed life cover and annuity payout.
Choose between LongLife Goal without Waiver of Premium and LongLife Goal with Waiver of Premium.
Benefit from the periodic return of Waiver of Premium charges and the option to reduce your premium.
Enjoy life insurance coverage until age 99 with Retired Life Income and Return Enhancer
A participating Unit-Linked Insurnace Plan (ULIP) with guaranteed life cover and loyalty additions.
Enjoy benefits until 99 years of age with the Whole Life policy option.
Get back Mortality and Policy Administration Charges at maturity.
Choose from 4 portfolio strategies and a variety of funds across equity, balanced, and debt to suit your savings needs.
HDFC Life Smart Pension Plan is a Unit Linked Pension Plan (ULPP) that helps you build a retirement corpus. It ensures regular income post-retirement and financial security during your golden years.
Offers coverage up to 105% of all premiums paid, including top-ups.
Allows altering the vesting date and premium payment term as per your needs.
Rewards you with additional units to enhance your retirement savings over time.
The ICICI Pru Signatrue Pension Plan is a Unit-Linked Pension Plan (ULPP) that helps you plan for a financially secure retirement. It combines market returns with flexibility to suit your retirement needs.
Enjoy low charges, with premiums, policy fees, and mortality charges returned at vesting.
Add top-ups to increase your savings for future needs.
Access funds during emergencies like major life events or illnesses.
Delay your pension start date up to 80 years to grow your savings further.
PNB Goal Ensuring Multiplier (GEM) is a Unit Linked Insurance Plan (ULIP) that combines life insurance coverage with investment options, aiming to help you achieve your long-term financial goals.
Get back Fund Management, Premium Allocation, and Mortality Charges.
Exclusive feature for child-related benefits.
Adaptable premium payment options.
Premiums waived on death or critical illness.
Canara HSBC Promise for Growth is a retirement plan that helps you achieve your long-term financial goals while providing life insurance coverage for your family.
Choose from three plans - Promise4Wealth, Promise4Care, or Promise4Life - based on your life stage needs.
Mortality Charges deducted during the policy term are added back to the Fund Value at maturity.
Receive Loyalty Additions every 5 years starting from the 5th policy year, and Wealth Boosters every 5 years starting from the 10th policy year.
The Kotak e-Invest Retire Rich Plan is a type of investment plan that combines investing your money in the market with some life insurance protection.
Enjoy 100% allocation of your premiums.
Gain additional fund value from 25% to 200% of Life Cover charges deducted.
Opt for the Rising Star option for Triple Protection Benefit on the parent's death.
Ensure post-retirement expenses are covered with Retirement Income and Income Booster.
Edelweiss Life Tokio Wealth Secure Plus is a non-participating unit-linked best pension plan in India with guaranteed life cover and maturity benefits.
Ensure continued policy coverage for your child in the event of your unfortunate demise.
Choose from a selection of 7 funds and enjoy unlimited switches if you opt for the Self-Managed Strategy.
Start your savings journey with premiums as low as Rs. 1,000 per month.
Tata Fortune Guarantee Retirement Ready Plan is an individual, non-linked, non-participating pension plan designed to provide you with a guaranteed income after retirement, along with life insurance coverage.
Choose from 3 flexible plans: My Pension, Partner Pension, and Partner Pension Plus.
Enjoy a boost to your retirement corpus with guaranteed additions of 6% of the sum assured on vesting.
Special discounts for women, transgenders, and customers under 35 years of age.
Max Life SWP, which stands for Smart Wealth Plan is a whole-life insurance based retirement plan in India that is designed to provide income for a long period.
Choose from Early Income, Early Income with Guaranteed Money Back, or Deferred Income Plans, all offering guarantees and cash bonuses.
Accrue and withdraw survival benefits as needed, with flexible withdrawal options.
Select an income period, including Whole Life Income, up to ages 100, 85, 75, 70, 65, or 60.
Start investing early in a pension plan to benefit from compounding interest and build a secure retirement fund.
You can take control of your retirement savings by investing in a pension plan, as there are no employer-sponsored plans available.
Employees should not completely rely solely on government schemes; you can secure your retirement with your own pension plan.
A retirement plan can help you maximize tax savings under Section 80C and Section 10(10D) while securing your golden life.
A pension plan ensures financial stability in your non-earning years by building a reliable corpus.
Prioritize retirement savings with a pension plan to achieve financial freedom and independence.
A retirement plan also protects you against rising costs of living with plans offering increasing annuities.
The three main eligibility criteria for purchasing a retirement plan in India are:
Minimum Entry Age: Typically, the minimum entry age for a retirement pension plan is 18 years, but some plans require an entry age of 30 years.
Maximum Entry Age: The upper limit to purchase a retirement plan is usually around 70 years.
Premium: You must pay a minimum premium for your retirement plan, as the pension amount is based on the premium paid.
Vesting Age: The age at which you start receiving your pension is known as the vesting age, which is usually set at 40 years but can vary depending on the insurance provider.
It is important that you consider the following aspects before investing in a retirement plan:
Retirement Age and Goals: Determine your desired retirement age and the lifestyle you want to maintain post-retirement.
Financial Needs: Assess future expenses like healthcare, inflation, and daily living costs to estimate your required retirement corpus.
Plan Type: Choose between traditional pension plans, market-linked plans (ULIPs), or annuity-based plans based on your risk appetite.
Premium Affordability: Ensure the premium amount fits within your current budget without disrupting other financial goals.
Tax Benefits: Evaluate tax deductions on premiums under Section 80C and tax exemptions on maturity under Section 10(10D).
Annuity Options: Check for flexibility in annuity payouts—lump sum, monthly, or increasing annuities to combat inflation.
Life Cover: Look for plans that provide life insurance coverage along with retirement benefits.
Flexibility and Add-Ons: Opt for plans that offer withdrawal options, top-ups, or riders for critical illness or disability.
Plan Performance: Analyze historical returns for market-linked plans and the financial strength of the insurer.
Loan Facility: Check if the plan allows borrowing against the policy in case of emergencies.
Inflation Adjustments: Ensure the plan offers features to keep up with rising costs, such as increasing annuities.
To buy a retirement plan, you will want to start by finding out about your financial goals, then follow these steps:
Step 1- You can check retirement plans on this page or through the Policybazaar homepage.
Step 2- Check the features and premiums of different plans to find the best fit for you.
Step 3- Pick and choose the most suitable plan that aligns with your goals and needs.
Step 4- Think about adding on features or adjusting coverage if needed to modify the plan according to your situation.
Step 5- Make your payment online and receive confirmation about your retirement plan.
Policybazaar offers you certain facilities that ease out your experience in purchasing a pension plan. Let us learn them below:
Wide Range of Options: You can compare multiple pension plans from top insurers on a single platform.
Easy Comparison: Policybazaar allows you to analyze features, benefits, and premiums of different plans to make an informed decision.
Simplified Language: It offers you an easy to understand platform with easy calculations using a Pension Calculator to estimate premiums and returns on retirement easily.
Customizable Plans: Find plans tailored to your retirement goals, budget, and financial needs.
Transparent Process: No hidden charges; all details are clearly presented before purchase.
Expert Assistance: Get guidance from financial advisors to choose the best retirement plan.
24/7 Customer Support: Round-the-clock assistance for queries, claim processes, and policy management.
A pension calculator is an online tool that helps in calculating the pension amount receivable by factoring things like your current income, savings, and expected retirement income in mind. The pension calculator requires details like:
Your Age
Current Monthly Expense
Your Retirement Age
Following are the factors to be kept in mind to estimate the amount needed post-retirement:
Start Early: It is best to plan as early as possible. If you start in your early 20s, you will have more time to build a good corpus at the time of retirement.
Set a Goal: It is important to set aside a good percentage, say 15%-20% of your total earnings, for your retirement.
Target your lifestyle: Keep in mind the lifestyle you want to maintain after retirement and plan accordingly.
Account for Inflation: Always keep in mind the growing inflation rate while planning your retirement. The cost of living will go up every passing year.
Diversify Investments: Never put all balls in one pool. Always diversify your investment across different asset classes to reduce risk.
Save Consistently: Maintain the habit of savings, not just for 1 day but till the time you are earning.
Use a pension calculator: A pension plan calculator is a helpful tool that will help you plan your investments better.
Review and adjust: Keep on reviewing your investments from time to time. As age grows, so do personal goals.
Retirement planning is the process of preparing your finances for the retirement stage of your life. It involves setting goals, estimating your income needs, and taking steps to accumulate and manage funds to support those needs throughout your retirement years.
Define Your Goals: You need to set clear goals for your retirement, like your house, your place of residence, your car, daily lifestyle, etc.
Estimate Your Income Needs: Calculating your estimated monthly expenses post-retirement is important to maintaining your desired lifestyle. Factors like healthcare, inflation, and lifestyle changes should be considered while planning.
Grow Your Retirement Fund: Retirement fund building means investing at the right age and time in investment options like ULIPs or mutual funds that help you grow your money and safeguard your retirement.
Manage Your Funds: Fund management and strategizing investments to maximize returns while minimizing risks are key factors to consider in retirement planning.
At different ages, you have different sets of responsibilities and priorities. Hence, your retirement plan at different ages can also be different. It is up to you to balance your expenses and retirement investments as per your current age and financial obligations. Let us have a look at how you can approach your retirement planning age-wise.
Retirement planning is important for you for the following reasons:
Secure your future: Retirement planning makes sure that you are financially secure in your later years.
Beat inflation: Starting retirement planning early in your life allows your investments to grow and beat inflation in the future.
Reduce financial stress: Early retirement planning removes worries about money during retirement.
Maintain Independence and Lifestyle: Retirement planning ensures you remain financially independent and free to enjoy your passions without relying on others.
Tax Advantages: Enjoy tax benefits on contributions and potential tax exemptions on maturity proceeds.
Protection for Loved Ones: Most plans include life insurance benefits and optional riders for critical illness or disability.
Prepare for unexpected expenses: You can build an emergency fund through early retirement planning.
Pension plans play an important role in securing your financial stability during your retirement. years. With so many options available you can choose and modify the one that meets your financial needs and ensures you live a comfortable life after retirement.
†Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by any insurer. This list of plans listed here comprise of insurance products offered by all the insurance partners of Policybazaar. The sorting is based on past 10 years’ fund performance (Fund Data Source: Value Research). For a complete list of insurers in India refer to the Insurance Regulatory and Development Authority of India website, www.irdai.gov.in
*All savings are provided by the insurer as per the IRDAI approved
insurance plan.
# The investment risk in the portfolio is borne by the policyholder. Life insurance is available in this product. The maturity amount of Rs 1 Cr. is for a 30 year old healthy individual investing Rs 10,000/- per month for 30 years, with assumed rates of returns @ 8% p.a. that is not guaranteed and is not the upper or lower limits as the value of your policy depends on a number of factors including future investment performance. In Unit Linked Insurance Plans, the investment risk in the investment portfolio is borne by the policyholder and the returns are not guaranteed. Maturity Value: ₹1,05,02,174 @ CARG 8%; ₹50,45,591 @ CAGR 4%
^The tax benefits under Section 80C allow a deduction of up to ₹1.5 lakhs from the taxable income per year and 10(10D) tax benefits are for investments made up to ₹2.5 Lakhs/ year for policies bought after 1 Feb 2021. Tax benefits and savings are subject to changes in tax laws.
¶Long-term capital gains (LTCG) tax (12.5%) is exempted on annual premiums up to 2.5 lacs.
~Source - Google Review Rating available on:- http://bit.ly/3J20bXZ
**Returns are based on past 10 years’ fund performance data (Fund Data Source: Value Research).
Tata AIA
Max Life
Bajaj Allianz
SBI Life
HDFC Life
ICICI Prudential
Edelweiss Life
Kotak Life
Future Generali
PNB MetLife
Aditya Birla Sun Life
Aviva
Ageas Federal
Bandhan Life
Canara HSBC
IndiaFirst
Pramerica Life
Reliance Life
Sahara Life
Shriram Life
Star Union
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