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What Types of Retirement Plans Do Employers Offer?

Updated On Aug 19, 2021

As consumers become more aware of their post-retirement demands, the market has responded in kind by developing better programmes. Even the government has implemented pension plans and retirement programmes that are very beneficial to the public, but it is up to the individual to determine which plan is the most flexible for him. Continue reading to learn more.

What Types of Retirement Plans Do Employers Offer?

These retirement products are only meant to provide for one's requirements after retirement. Each of these services has unique characteristics that you should be aware of. They provide a variety of tax advantages, which are available either at the time of investment or at maturity. However, each of them has their own set of requirements, therefore it is recommended that you conduct a study to determine which of these retirement plans is best suited to your needs.

  • The National Pension Scheme (NPS)

The National Pension Scheme is a huge investment product overseen and controlled by the Pension Fund's Regulatory and Development Authority (PFRDA). During the postponement phase, one must invest for sixty years before beginning to get 40% of the corpus of an annuity from a life insurance company. The income during the period of deferment, as well as the pension, are not guaranteed and are entirely dependent on the underlying class of assets.

  • Public Provident Fund (PPF)

The Public Provident Fund is a tried-and-true long-term investment. The Fund is a fund for public provision. Because the PPF is 15 years long, the compounding of duty-free interest has huge ramifications, particularly in later years. Every quarter, the PPF interest rate is determined by the return on government securities. It is also a safe investment because national guarantees back up the interest and principle invested.

  • Atal Pension Yojana (APY)

The Atal Pension Yojana (APY) is a deferred pension plan that needs you to be between the ages of 18 and 40 and to have a bank account in order to save. At the age of 60, there are five guaranteed pension schemes or alternatives with APYs ranging from Rs 1,000 to Rs 5,000 per month. APY offers five different guaranteed pension schemes or alternatives. The premium will be determined by the amount of pension you select.

  • Employee Provident Fund (EPF)

Under the Employee Provident Fund, an employee must make a certain payment to the plan, and the employer must make an equal contribution. When the employee retires, he receives a lump payment that includes a contribution from the company as well as his personal interest. The company contributes 12% of the base wage plus low-income and retention benefits.

  • Mutual Funds Focussing On Retirement

The India Pension Fund, the UTI Pension Benefits Pension Fund, the Reliance Retirement Fund, and the HDFC Retirement Savings Fund are four retirement savings schemes. Despite being geared towards retirement, they are far less exposed to equities that have the potential to deliver good inflation-adjusted gains over the long run.

  • Life Insurance Policies Aimed At Retirement

You can invest in unit-linked pension schemes offered by life insurance companies. The major reason you have not been as popular as other pension plans is because you have built up guarantees that you must offer in accordance with the regulations. Guarantees are expensive, not only because they increase expenses, but also because they limit the return possibilities. The insurer guarantees not only the death benefit but also the maturity at the vested age, i.e. the retirement age. The policyholder has reached the age of vested interest.

  • The Senior Citizens Savings Scheme

The Senior Citizens Savings Scheme is a government-backed savings programme (SCSS). Because the government holds the SCSS funds, it is safer than bank FDs. The SCSS must be appointed for a five-year term that can be extended for an additional three years. SCSS has an interest rate of 7.4 percent. SCSS investments are tax deductible up to Rs 1.5 lakh per year, but their interest is not.

Take Away

Retirement investments do not have to originate from the investments listed above. Nothing can be labelled the best; a combination of several can better serve the goal. Because none of them are equities-focused, it is advisable to invest funds for retirement needs through 2-3 equity mutual funds. The goal is to build a corpus large enough to support you after you retire.

Also read

How Many Years Does a Pension Last?

Is A Pension Considered A Retirement Plan

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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