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Different Pension Schemes Available In India

So, what are pension plans? Retirement plans are sometimes known as pension plans. An individual can put a percentage of their money into the allocated plans under these. The basic goal of a pension plan is to provide a steady income after retirement. Investing in these schemes has become vital due to rising inflation. As a result, even if an individual has a sizable savings account, they may still require a pension plan.

Savings are usually used to cover unexpected expenses. As a result, putting money into a pension plan will help an individual when all other sources of income dry up. Pension plans in India are divided into two stages - accumulation and vesting. Investors in the former pay annual premiums until they reach retirement age. In the latter part, often known as the vesting stage, would commence after an insured individual has reached retirement age. The retiree will begin receiving annuities at this point in the pension plan until their death or the death of their nominee. To understand more about the different pension plans or schemes in India, read on.

Types Of Pension Plans

Following are the different types of pensions plans in India that an individual can choose from -

1. National Pension Scheme (NPS)

In 2004, the Indian government created a pension system for anyone who wished to increase their pension amount. Depending on an individual’s preferences, their funds will be invested in the debt and stock markets. It allows an individual to take 60% of their earnings upon retirement, with the remaining 40% going toward the purchase of an annuity plan.

2. Deferred Annuity

An individual can build a body of funds with a deferred annuity plan by paying a single payment or recurring premiums over the policy period. When the policy period expires, the pension begins. This delayed annuity plan provides tax advantages since the money invested is not taxed until it is withdrawn. This plan may be purchased by either recurring donations or a one-time payment. This method works for an individual whether they choose to invest the full cash at once or in little increments.

3. Pension Funds

The Pension Fund Regulatory and Development Authority (PFRDA), a government agency, has approved six organisations to act as fund managers. These plans provide a higher rate of return as they mature and are in effect for a longer period of time.

4. Immediate Annuit

The pension starts straight away in this sort of plan. An insured individual’s pension begins as soon as they deposit a lump sum payment. This is determined by the amount invested by an insured individual. An individual has a variety of annuity alternatives to select from. The premiums of instant annuity programmes are tax free under the Income Tax Act of 1961. Following the death of the insured individual, the money is directed to the nominee.

5. Guaranteed Period Annuity

This annuity option is available for durations of five, ten, fifteen, and twenty years, regardless of whether the holder finishes the tenure.

6. Annuity Certain

The annuitant gets paid an annuity for a certain number of years under this plan. The annuitant chooses this time period, and the beneficiary is directed to receive the annuity in the event of their death.

7. Life Annuity

These plans give the retiree an annuity for the rest of their lives. If the annuitant dies and the option 'with spouse' is selected, the pension sum is directed to the spouse.


"Withdraw from one's post or occupation, or from active working life," is what retirement means. As a result, one must plan their future correctly in order to enjoy a stress-free retirement. The goal of retirement planning is to obtain financial independence, which may be accomplished by investing in a comprehensive pension plan. Pension plans assist in securing one's future and ensuring a stress-free retirement.

You may also like to read - How To Use An Annuity Plan To Achieve Your Financial Goals?

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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