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Benefits Of Buying Traditional Pension Plans

Updated On May 24, 2021

Traditional pension plans are plans maintained by employers who help individuals in securing their financial future and protect them from any uncertainties that may occur post-retirement. These types of plans are best suited for senior citizens who are looking to effectively and efficiently plan their retirement. The following are the benefits of buying traditional pension plans- 

Benefits of Traditional Pension Plans

Following are the benefits of traditional pension plans: 

1. Develops a Savings Habit

A traditional pension plan is a dedicated plan to accumulate a corpus that would take care of your post-retirement expenses also known as retirement plans. A retirement plan ensures that you pay the premium amounts timely to keep your retirement plan active. Regular allocation in the form of premium ensures that you save a substantial amount periodically to give yourself a stress-free and financially independent retirement. The earlier you start accumulating for your retirement corpus, the more terminal corpus you can build.

2. Gain from Compounding

Compounding is the most effective way to build wealth in the longer term. Compounding refers to generating earnings on your previous earnings. The more time you give to your investments, the magic of compounding will enable it to grow vast and larger. Pension plans offer you the convenience to invest in the form of a premium and build a retirement corpus with the magic of compounding. The longer you stay invested in the plan, the larger you are likely to create your retirement corpus.

You may also like to read:- What Is a Life Insurance Ombudsman? 

3. Offers a Stable Investment Plan along with Insurance

A retirement plan is a combination of an investment plan along with an insurance plan. It is a very special category of insurance plans which are designed to meet your post-retirement financial needs. It offers you the platform to collect your savings to build your retirement corpus. Pension plans vary from traditional to unit-linked retirement plans. Based on the risk appetite of the investor, one can opt for the investment portfolio ranging from aggressive to balanced to stable. It allows you to maintain your retirement corpus along with ensuring financial security for your loved ones. With a rise in income, one can also invest the savings in the form of a top-up premium under a unit-linked retirement cum insurance plan (ULIPs).

4. Safeguards the Interests of Loved Ones

Your life is too precious for your loved ones and especially if you are the sole provider of the family. During your working years, you assure that you save enough to meet the short-term and long-term financial goals of your immediate family.

Along with the investment, the retirement plan allows you to safeguard your dependents financially with its insurance aspect. In the event of the unfortunate death of the life insured, the nominee is compensated with the due death benefit.

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Also Read:- GST Rates for Life Insurance Premiums  


Best retirement plans offer you enough flexibility and good returns to accumulate a stress-free retirement fund to live post-retirement life with enough corpus and leisure too. Many traditional pension plans provide high returns which can help you in living your dream life. 

Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.  

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