It would be appropriate if someone says that everyone must have a retirement pension plan(s) especially for salaried individuals who doesn’t have any secured income source other than their salary. These retirement pension plans are mostly provided by insurance companies. Through this plan an insured individual will get regular premium after their retirement or during their no-income period.
Retirement Pension Plans | Important Features
Before knowing the details of retirement pension plans, it is more important to know what is retirement pension plans basically and how does it work to generate a revenue to you post retirement on a regular basis.
What is Retirement Pension Plan?
Retirement pension plans are those insurance schemes that provide or create your retirement amount. Any individual can opt for this plan to conceive a retirement bonus through their investment in insurance plans for any number of year. The above said income is generated for you upon maturity of this chosen insurance plan.
Why do you Need a Retirement Pension Plan?
It is very obvious that not every individual keeps getting income once after their quit their job or retire from your career. However, to meet out the expected and unexpected expenditures one would certainly need a regular income source. If you are considering your future monetary strength a retirement pension plan could be a must for you to meet out the then expenses after your retirement.
You would never know how your income path would be and cannot get struck in the twist which future might throw on you. At the age of retirement you should retire with all the hopes of a peaceful future and worry-free days.
Example of a Retirement Pension Plan
Assume that a 25-year-old individual wants to invest in a retirement pension plan for a sum assured of Rs. 600,000 with a tenure of 35 years. In this case, he has to pay Rs. 15,000 every year periodically which is his premium amount. During the course of insured period for any eventualities that might happen, the beneficiary of the insured individual would get the sum assured i.e. the sum of Rs. 600,000.
After the tenure of 35-years time the individual has the liberty to decide the pension plans in terms of periodical returns. He can choose to receive his pension monthly, quarterly or half-yearly basis.
Where does the retirement pension plan is Invested?
There are two types of pension plans invest exists – one is conventional pension plan invest and ULIP or market linked pension plans invest.
The conventional pension plan invest a major portion of the premium in bonds and government securities (G-Secs)
The ULIP or Market linked pension plans investment is made in equity markets.
Do I need to invest in Retirement Pension Plans?
Though, choosing an investment option is purely an individual’s interest based on his needs and requirements it is necessary to have a knowledge about their future plans and the activities. For those who are salaried and dependent only on a salary-based income, yes it would be necessary to have a retirement pension plan based investment or insurance.
Remember, this insurance plan is not during your period of efficient income generating period but it is for your post-retirement period. One must plan and ensure a regular and secured alternative source of income post retirement to fulfill your monetary needs and accomplish the future needs.