Retirement Plans.

What is Retirement Plan?

A retirement plan is a type of investment plan that helps you accumulate a part of your savings over a long-term period to have a secured financial future. It helps you to deal with uncertainties post-retirement and ensures a steady flow of income after retirement. Even if a person has a good amount of savings, a retirement plan is nevertheless crucial.

retirement plans in India help you to create a financial cushion in the long term so that you can ensure to have a financially sound future after retirement. In a retirement plan, the insured must contribute a specific amount regularly until the time of retirement. The accumulated amount is given back to the insured as a retirement or annuity at regular intervals of time. Best retirement plans in India not only secure the individual’s financial future after retirement but also help an individual deal with the eventualities post-retirement.

Savings get exhausted very fast and are sometimes used in emergencies. Thus, it is very important to choose the best retirement scheme so that you secure your cash flow for meeting basic daily needs post-retirement. When you continuously invest in a retirement plan, the amount multiplies due to the benefit of the power of compounding, which makes a lot of difference to your final savings corpus.

Types of Retirement Plans

A wide range of retirement plans in India are available to cater to the insurance seekers’ requirements. These plans have multiple classifications based on the plan structure and benefits. These retirement plans can be further divided into eight categories:

Let’s explore these retirement funds in detail:

Deferred Annuity

A Deferred retirement Scheme allows you to accumulate a corpus through regular premium or single premium payments over a policy term. After the completion of the policy tenure, the retirement is provided to the insured. The deferred retirement scheme offers various benefits, including tax exemption.

In a deferred retirement plan, only 1/3rd of the corpus is tax-free on withdrawal, whereas 2/3rd of the corpus is taxable. The amount invested in a deferred retirement plan is locked and cannot be withdrawn for any emergency.

A deferred retirement scheme can be bought by paying one-time payments as well as paying regular premiums. Therefore, these retirement schemes are suitable for all types of investors, be it those who want to invest systematically or those who have a chunk of money to invest in one go.

Immediate Annuity

Under an immediate annuity scheme, the retirement is provided immediately. The policyholder has to pay a lump-sum amount, and a retirement will be provided instantly, based on the lump-sum amount paid by the policyholder.

Under the immediate annuity retirement scheme, the insured can choose from a range of annuity options. Moreover, the premiums paid are tax-exempted as per Income Tax Act, 1961. In an immediate annuity retirement plan, the policy nominee is entitled to receive the money in case of the insured person’s demise during the policy’s tenure.

Annuity Certain

Under this retirement plan option, the annuity is paid to the annuitant for a specific number of years. The annuitant can choose the period, and if they pass away before receiving all complete payments, the annuity will be paid to the policy’s beneficiary.

With Cover and Without Cover retirement Plans

With cover retirement plans have a life cover component the plan. Upon the policyholder’s death, the policy’s beneficiary pays a lump sum amount. However, the cover amount is not very high since a large part of the premium is paid towards growing the corpus rather than covering life risk.

Under the cover retirement plan, no life cover is offered to the insured person. In the event of the unfortunate death of the insured person, the nominee will get the corpus (till the date of the death). Currently, deferred retirement schemes come with the option of life cover, whereas immediate annuity plans do not offer the option of life cover.

Guaranteed Period Annuity

Under a guaranteed period annuity plan, the annuity is provided to the policyholder for certain periods like 5 years, 10 years, 15 years, or 20 years, whether or not the insured survives that duration.

Life Annuity

Under the life annuity plan, the retirement amount will be paid to the annuitant until death. After choosing the option of ‘with the spouse,’ the retirement amount will be given to the policyholder’s spouse in case of the policyholder’s death.

National retirement Scheme (NPS)

The Government of India introduced New retirement Scheme to secure the financial future of the individual after retirement. As per an individual’s preference, the money invested in the National retirement Scheme is put in equity and debt funds to generate returns on investment. The policyholder can withdraw 60% of the amount at retirement, and the rest 40% of the amount is used to purchase the annuity. The maturity proceeds are not tax-free.

retirement Funds

The retirement fund is a type of retirement scheme that remains in force for a long period. This retirement plan offers a comparatively better return upon maturity and is regulated by the Government under the retirement Fund Regulatory and Development Authority (PFRDA).

Besides, retirement funds provide better returns during the maturity period when one compares to the other and remains active for a specified period. Insurance providers offer retirement funds intended to empower policyholders to pull back their annuity sum at the hour of the aggregation stage. This component guarantees that the sum is constantly arranged for an unexpected crisis if it emerges. Above all, it keeps you from relying on banks for a loan under such circumstances.

Whole Life ULIPs

Under this option of the retirement plan, the money stays invested for the whole life of the insured, and upon retirement, they can make partial withdrawals and get tax-free income. Additional withdrawals are allowed whenever needed or whenever necessary.

Defined Benefit

Defined benefit plans ensure that you pay a specific amount from the retirement income for life. It is decided on the premise of the retirement amount, which is formulated keeping into account your earnings as well as the number of years you have served with the employer. This implies that you and your employer can contribute easily to most plans.

Defined Contribution

In a defined contribution plan, the retirement income is not guaranteed; however, the contributions are. Within this plan, both you and your employer can easily contribute to the plan. Some of the contributions that you make may be matched by your employer.

You are answerable for contributing all commitments to develop your investment funds. The sum accessible for your retirement relies upon the all-out contributions made to your record and the investment returns this cash earned.

HDFC Life Insurance

HDFC Life Insurance offers specialized retirement plans in India for you and your loved ones. With customized coverages and benefits, it is best suited for individuals who need complete protection at affordable costs.


Savings Incentive Match Plan for Employees (SIMPLE) Individual Retirement Account (IRA), or SIMPLE IRA, is a retirement savings plan especially designed for small businesses with 100 or less employees. It is an easy and suitable option for employees of small businesses.


Simplified Employee retirement (SEP) Individual Retirement Account (IRA), or SEP-IRA, is a retirement plan that can be opted for either by self-employed or employers to meet their retirement needs. Tax deductions are applicable under the SEP-IRA, and contributions are made to employees as per their eligibility.

Roth IRA

A special Individual Retirement Account (IRA), Roth IRA, is a retirement plan in which an individual pays tax on the money deposited in their bank account every time, but all withdrawals will be tax-free in the future.

Features and Benefits of Retirement Plans

In today’s day and age, people start planning for retirement living at an early stage so that at the later stage, they do not have to depend on others to make ends meet.

In case you want to opt for a retirement Plan, ensure that the plan you choose has the following features:


An annuity is the fixed amount an investor will receive each year throughout their life tenure. annuity can be immediate or deferred depending upon the nature.

Sum Assured

The sum assured is a definite amount offered to the nominee of the plan at the end of the plan tenure. It is generally 10X the annual premium or the fund value of the policy.

Vesting Age

The vesting age is the age when the investors starts receiving the monthly retirement from their retirement plan.

Payment Period

The payment period is when the investor starts receiving the payments post-retirement.

Accumulation Period

The accumulation period is the complete time period wherein the investor pays regular premium towards their policy or plan.

Surrender Value

The surrender value of retirement plans is the amount the insurance company will pay the individual if they surrender the plan before its maturity.

Secure Your Dreams with Sunsoil Financial

Drop in you details and our experts will call you back

    *By submitting your details, you agree to be contacted by Sun Soil Financial for Loan, Insurance & Investment product related information through Email/SMS/Phone/Letter

    We'd love your feedback!

    Thank you for visiting our website. Let your Feedback fly to us: To help us continue provide better services, share your experience through a short survey.


      What to Cook This Week ab 1

      Peruvian roast chicken, tofu-ginger stir-fry and more recipes. 1

      What to Cook This Week

      Peruvian roast chicken, tofu-ginger stir-fry and more recipes.

      What to Cook This Week

      Peruvian roast chicken, tofu-ginger stir-fry and more recipes.

      Related Articles

      Being financially illiterate can lead to a number of pitfalls, such as being more likely to accumulate unsustainable debt burdens, either through poor spending decisions or a lack of long-term preparation. This, in turn, can lead to poor credit, bankruptcy, housing foreclosure, and other negative consequences.

      Read More

      Example 1

      Read More

      example 2

      Read More

      Share With