Retirement Plans: Best Retirement Plans & Policies in India - PNB MetLife

Retirement Plans

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Retirement Plans in India by PNB MetLife

Retirement is a major turning point in one’s life and it is always advisable to do some retirement planning ahead of time. Therefore, you should invest in a retirement plan well in advance to prepares you for all forthcoming responsibilities. Always plan considering your current standard of living, your assets and liabilities and the impact of inflation on them. You can check how much you would require by the time you retire with the help of our Retirement Calculator. Choose the most suitable plan for yourself that allows you to fulfil all your responsibilities and duties with ease.


Plan now to enjoy a relaxed life later.



What are Retirement plans?


Retirement plans , also known as pension plans , allow the policyholder to allocate a part of his/her savings to accumulate over a specific period. Once the policyholder retires, these plans help him/her in having a steady flow of income.
In India, retirement planning is gaining a lot of importance, ever since people have realized the significance of being financially independent.


Highlights of Retirement plans

  • It is advisable to plan for your retired life from an early age to get maximum benefits. 
  • Use the retirement calculator to estimate the amount you would need to invest now, to lead a comfortable life, post-retirement. There is an algorithm with factors like inflation rate, retirement age, the present cost of living etc. to derive an approximate figure. 
  • You receive regular payouts post your retirement which is called Annuity. An annuity can be received on a monthly, quarterly or yearly basis, depending on your policy type. 
  • An affordable premium has to be paid to get these benefits.

Benefits of Retirement plans

Investing in pension plans or retirement plans can help you in the following ways.

  • They help you maintain a comfortable standard of living once you’ve retired.
  • You’re eligible for tax benefits on the premiums paid.
  • With a joint annuity option, you can also obtain a protective cover for your spouse.
  • Depending on your post-retirement goals, you can choose from a variety of retirement plans available in the financial market.


Important features of Retirement plans
While some features may vary from one retirement plan to another, all the best pension plans have certain common characteristics.


Guaranteed income

Depending on the kind of pension plan, you can receive a fixed income each month either after you retire or right away. This guaranteed income is essentially the pension. 

Accumulation phase

This is the phase between the date you purchase the plan till the date it matures. Over this period, you continue to pay premiums if you’ve opted for period premium payments. The premiums invested build up to form a sizeable corpus, which is where your retirement benefits come from.

 

Vesting age

Vesting age is the age when you start to receive the guaranteed monthly pension. Depending on the plan you choose, the vesting age can be as low as 40 or even as high as 90. 

Payment period

Payment period is the duration over which the guaranteed monthly pension is paid out to the investor. In most cases, the payment period begins after the accumulation phase. However, some plans may allow for partial withdrawals even during that phase. 

Surrender value

If you decide to stop investing in your retirement plan, you are required to surrender the policy to the insurer. If the terms of the policy permit, you might receive a set percentage of the premiums paid by you as the surrender value.

Liquidity option

This is a feature that allows the investor to make partial withdrawals from their retirement corpus even before the accumulation phase is complete.


Types of Retirement plans
There are different types of retirement plans available in the financial market. What you choose ultimately depends on the kind of financial support you seek post-retirement. Some of the most commonly chosen types of retirement plans are listed here.

  • Deferred annuity plan: You can choose to pay a single lump sum premium or make periodic premium payments. Once the premium payment term is complete, you will begin to receive regular pension income.
  • Immediate annuity plan: You only need to make a single premium payment, after which you immediately begin receiving pension payments regularly.
  • Life Annuity: Under this type of retirement plan, pension is paid out until the death of the policyholder. Thereafter, if the option had been chosen, the spouse continues to receive annuity payments.
  • Pension plan with life cover: This kind of pension plan offers the dual benefit of a protective life cover along with a retirement corpus. Here, the policyholder’s nominee receives a lump sum amount in the event of the former’s death.


How to choose the perfect retirement plan?
To choose the perfect retirement plan for yourself and your spouse, here are some factors to consider.

  • Your current age
  • The level of income you currently earn
    The amount of income you wish to receive post-retirement
  • The maximum amount of premium you can afford to pay
  • The period for which you can pay this premium


Once you’ve identified these factors, compare the various retirement plans offered by financial institutions and pick the one that best aligns with your future goals.


Things to keep in mind before choosing your retirement policy

  • Calculate the approximate amount of money you would require to sustain a comfortable life post-retirement. Find an appropriate plan that meets your requirements.
  • Check the affordability of the premium rates and the efficiency of the claim procedures in advance.
  • Do an in-depth research on all the options available before settling on a plan.


Calculating the premium for retirement plans
The premium charged for retirement plans is calculated after factoring in various elements, such as your age when you begin investing, the age at which you plan to retire, your current monthly expenses, the potential inflation rate, and the savings or investments you already possess. By taking these factors into consideration, a retirement calculator arrives at the amount of monthly investments needed to achieve your retirement goals. This is, essentially, the premium you need to pay monthly.


Why should you opt for Retirement plans?

  • In order to lead a comfortable life post-retirement, you need to plan and save up well in advance
  • Financial self-sufficiency is a boon that will help you in your second innings.
  • Retirement goals like the desire to pursue hobbies, go on a world tour, move to another city, or remodel your home can only be fulfilled if you have retirement plans that help you meet the financial requirement of these goals.
  • Nuclear family structures are common in today’s day and age. So, it is imperative to be prepared to look after yourself to ensure that there are no changes in your lifestyle.


Documents needed to buy Retirement plans
You might need the following documents to invest in retirement plans in India.

  • Proof of age like passport, driving license, or PAN car
  • Proof of address like passport, driving license, Aadhar card, voter ID, or even a utility bill
  • Proof of identity like PAN card, Aadhar card, passport, driving license, or voter ID
  • Proof of income like salary slips, Form 16, or ITR V for the previous 3 years
  • Passport size photographs


Why PNB MetLife’s Retirement plans?
PNB MetLife’s central focus is to provide customers with a wide array of plans, so they can find the perfect solution for the future. With a plethora of choices like the MetLife Retirement Savings Plan, MetLife Smart Platinum, and MetLife Immediate Annuity Plan, among others, you can pick the one that best aligns with your post-retirement goals.

 

Get your PNB MetLife Retirement plan today!

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FAQ Long Term Savings Plans

What are the tax benefits in case I opt for a pension plan?

Investing in pension plans in India make you eligible for tax benefits, as specified in the Income Tax Act, 1961. Section 80CCC of this Act provides that premiums paid as part of contributions towards retirement plans and pension plans can be deducted from your total taxable income. The maximum amount of deduction permissible is Rs. 1.5 lakhs. So, your tax liability also reduces correspondingly.

As for withdrawals made from the corpus fund at maturity, the tax benefits are generally limited to the portion that’s immediately paid out to the policyholder at the vesting age. In most cases, this is one-third of the corpus fund, and it’s entirely tax-free.

To help you with your retirement planning, there are different types of pension plans in India. Here’s a list of the most popular kinds of retirement plans.

A pension plan is, in essence, a retirement plan wherein the investor contributes to the retirement corpus through a single premium payment or periodic premium payments over the course of the accumulation phase. In the context of the workplace, a pension plan may include contributions by the employer and the employee, into a common pool of funds that’s used for the employee’s future benefits. 

Retirement corpus refers to the pool of money that your investments have grown to form over the years. This is the amount of funds required to get you through your post-retirement life. To calculate the corpus needed to maintain your quality of life after retirement, you need to follow these steps.
  • Calculate the number of years left until you intend to retire (expected retirement age minus current age).
  • Identify the number of years to come after you’ve retired (life expectancy minus expected retirement age).
  • Account for inflation by applying the inflation rate on your current annual expenses to arrive at your annual cost of living post-retirement.
  • Multiply your annual cost of living after retirement by the number of post-retirement years, and you have your retirement corpus.

A pension plan works by allowing you to build a corpus over the course of your working life, so you can have sufficient financial support to fall back on when you retire. Typically, as the policyholder, you will need to pay premiums into the corpus periodically until the age at which you plan to retire. In some cases, only a single premium payment can be made. In other cases, you can pay premiums for a limited term.

Once you reach the vesting age, the service provider pays out your retirement corpus either as a lump sum payment or as periodic payments. You can even opt for a combination of these two payout options, so your post-retirement life is comfortable and hassle-free.

During your working years, it can be easy to maintain a comfortable standard of living. However, when you retire and that regular source of income ceases, it becomes increasingly difficult to retain the same quality of life. If you aren’t employed in the public sector, your employer may not pay out regular retirement benefits to help you meet the cost of living after you’ve retired.

Here’s where retirement planning can help. By investing in the right pension plan, you can make sure that your post-retirement life is smooth and comfortable.

By investing in a retirement plan, these are some of the benefits you enjoy.
  • Your money grows into a sizeable corpus that takes care of your post-retirement expenses.
  • You earn a steady source of income after you’ve retired.
  • You can fulfil your life goals like traveling or taking up a new hobby.
  • You become eligible for tax benefits under section 80C of the Income Tax Act.
  • Some plans also act as a safety net for your spouse in the event of your demise.

When you’re buying pension plans in India, consider these factors to ensure that you buy the best pension plan to suit your specific requirements.
  • Your age at the time of purchase
  • The age at which you plan to retire
  • The amount of premium you can afford
  • The size of the retirement corpus you’ll need
  • Any other benefits or riders offered by the plan

The eligibility criteria for pension plans vary from one scheme to another. In general, however, these are some commonly required eligibility conditions that need to be satisfied.

  • There’s a minimum age you need to attain to invest in this plan.
  • There’s also an upper age limit beyond which you cannot purchase a pension plan.
  • A minimum premium or purchase price is payable by the investor who wants to buy a pension plan.
  • Similarly, some plans also have a clause about the minimum and maximum vesting age allowed.

To purchase a pension plan, these are some of the documents you’ll need.
  • PAN card
  • Aadhar card
  • Voter’s ID
  • Driving license
  • Passport
  • A utility bill, like electricity, gas, or telephone bills
  • Any proof of income such as form 16, salary slips, or bank statements
  • Passport-sized photographs of the applicant

If you choose the joint annuity option, you and your spouse shall be considered as annuitants under the pension plan. So, even in the event of the policyholder’s death, the spouse continues to receive benefits under the pension plan during the payment period. In some cases, the payments may be reduced to 50% for the surviving spouse. 

When you surrender your pension plan before maturity, the financial institution pays you a surrender value, which is generally a predetermined percentage of the premiums paid by you. This surrender value thus received is treated as income in your hands, and therefore, it’s taxable at the applicable slab rate. Additionally, you become ineligible for all the benefits originally stated in the plan.

Yes, a person can have multiple pension plans in place. For instance, it may so happen that you could have invested in a pension plan when you were 25. And at 30, you could have received a hike in your salary that puts you in a more comfortable position to invest further in your retirement. In situations like these, you can certainly go ahead and purchase another pension plan. However, you need to keep in mind that the tax benefits on your premium payments are only limited to Rs. 1.5 lakhs under section 80C. 

Investing in retirement plans offers you the following advantages.
  • They help you inculcate the habit of saving up for your retirement.
  • Pension plans prepare you for post-retirement life.
  • They allow you to fulfil your dreams and aspirations after you retire.
  • You enjoy tax benefits on the premium paid during the accumulation phase.

The first step to choosing the best retirement plan for yourself and your spouse is to identify your post-retirement goals. Figure out how much of a monthly income you’ll need to sustain your quality of life when you’ve retired. With this done, compare the many pension plans available in the market and identify the ones where the benefits align with your goals. Thereafter, you can go ahead and choose the plan that fits into your budget and offers you the advantages you’re looking for.

It’s best to invest in a retirement plan as early as possible. The earlier you invest, the more premium you can pay, and correspondingly, the bigger your retirement corpus will be. Purchasing a pension plan early also allows you to pay your premiums comfortably and makes you eligible for tax benefits for a longer period. So, if you haven’t already invested in a retirement plan, now might just be the best time to do so.

When it comes to retirement and pension plans, PNB MetLife offers a plethora of choices. You can compare different solutions and pick the one that best suits your specific needs. If you’re an employer looking to take care of the pension fund of your employees, we have a traditional employee benefits plan as well as a unit-linked employee benefits plan on our roster. There is also a group superannuation plan on offer. Alternatively, for individuals seeking to build a retirement corpus, PNB MetLife offers an immediate annuity plan as well as a retirement savings plan.

In addition to the great choice of plans on offer, here’s why you should choose PNB MetLife for investing in a pension plan.
  • Simple and minimal paperwork
  • Option to include your spouse in the plan
  • Flexibility in vesting age
  • Customer-centric benefits