History Of Pension Schemes In India
Updated On Jan 21, 2024
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Pension plans in India can be traced back to the time when the British ruled the country. The Royal Commission of Civil Establishments was set up in 1881 to give government workers their first pensions.
Moreover, amendments and additional provisions for government employee pensions were included in the Government of India Acts of 1919 and 1935. The government of India has several pension plans for people who work for the government or private companies. So, in the section below let’s talk about the history of pension schemes in India.
History of Pension Scheme In India
After successfully completing the Indian battle for independence in 1857, the British became the first to implement a pension system in India. The purpose of this pension system was to ensure that the local rulers continued to collect their British pensions and did not entertain any ideas of rebellion. The provisions of this system, however, served to encourage employees to make financial preparations for their lives after retirement. The Indian Pension Act of 1871 was passed into law to solve the numerous issues plaguing the previously established pension system.
With the passing of the Indian Pension Act in 1971, one-time increases were added to the pension every so often to make up for the continually rising cost of living. To appease retirees, the idea of a dearness allowance was brought into the spotlight. However, similar to the situation in the majority of developing nations, there was no comprehensive social security system in place to shield the elderly from the effects of economic hardship.
Current Situation of India's Pension System
In India, under most of the pension schemes, both the employer and employees need to make contributions towards the pension scheme. Provident funds, pension programs, and gratuity plan are some of the most important retirement options in India today. The first two plans offer retirement benefits in the form of a single lump amount, while the third and final plan offers payments in the form of a monthly annuity. These programs share several characteristics, the most prominent of which are that participation is required, they are occupation-based, they are connected to a person's earnings, and they include built-in insurance protection against death and disability.
The Introduction of a New or National Pension Scheme
On January 1, 2004, the Government of India announced the National Pension Scheme (NPS), which is a pension plan that is contributory in nature. Since May 2009, the NPS has also covered many people who work for themselves or in the "unorganised sector." The NPS is looked after by the Pension Fund Regulatory and Development Authority (PFRDA) and can be portable when you switch your job or job locations. The minimum contribution that needs to be made towards NPS is Rs. 500 and can be further increased depending on your will.
Best Pension Plans in India
Listed below are some of the other pension plans in India that you can consider buying:
- LIC Jeevan Akshay 6 Plan: The LIC Jeevan Akshay 6 Plan is an immediate plan that offers payouts in monthly, quarterly, half yearly, or annually. There is no medical test required to buy this plan and the premium can be paid on a monthly or lump-sum manner.
- SBI Life Saral Pension Plan: The SBI Life Saral Pension Plan is a single premium, individual, non-linked, non-participating, immediate annuity product. The minimum entry age is 40 years and the maximum entry age to this scheme is 80 years. Under this plan, the annuity is paid on a monthly, quarterly, half yearly, and yearly basis.
- HDFC Life Click 2 Retire: Another pension plan that you can consider buying is the HDFC Life Click 2 Retire. It is a unit linked pension plan that has a maturity age of 45 years as well as no additional charges. With this plan, you can start your retirement planning with an amount that is as low as Rs. 2000.
- ICICI Pru Easy Retirement: The ICICI Pru Easy Retirement provides the option to choose from different annuity options such as Life Annuity, Life Annuity with Return of Purchase Price, Life Annuity Guaranteed, and a few more. With this plan, you can make free switches for 4 times and enjoy a lot of other benefits.
- Bajaj Allianz Pension Guarantee: The Bajaj Allianz Pension Guarantee has a minimum entry age of 37 years and a maximum entry age of 80 years. The minimum amount you need to invest with this plan is Rs. 25,000, however, there is no limit on the maximum amount. This plan lets you choose from a range of annuities such as Life Annuity, Life Annuity with Return of Purchase Price, Joint Life Last Survivor, etc.
Conclusion
In an effort to offer senior citizens reliable financial support and peace of mind, the Government of India has established several pension programs that are designed to give senior citizens financial stability during their retirement years. You can easily explore a range of pension plans with InsuranceDekho and buy the best plan based on your needs and requirements.
FAQs
- What are some of the best pension plans I can consider buying?
Some of the best pension plans that you can consider buying are the LIC Jeevan Akshay 6 Plan, ICICI Pru Easy Retirement, HDFC Life Click 2 Retire, and more.
- When was National Pension Scheme introduced?
The National Pension Scheme was introduced in the year 2004.
- Is NPS a contributory scheme?
Yes, NPS is a contributory scheme.
