Importance of Pension Plan : Pension Plans are essential financial responsibility nowadays that everyone owes to themselves as well as to their loved ones. Those who ignore it suffer a setback when their incomes ebbs and their money supply suffer a gradual decline. With the increasing cost of living and healthcare, Pension Plans should be the top most priority to continue to live with ease.
How to choose a Pension Plan
Once you’ve decided that you will buy a pension plan that is one hurdle crossed the second hurdle that comes is which one to choose and how will I choose. Following are certain tips that will help you out in choosing a suitable Pension Plan.
- Early bird catches the worm: Pension plans should begin early. The day you receive your first cheque marks an onset for you to start with your pension plans. Over time as your salary hikes, increase your contributions.
- Equities add value: It has believed that equities add critical value to your portfolios. Therefore make sure that equities are a part of your plan.
- Diversify your Interests: Although investing in equities is very good but so are gold and deposits. You need a portfolio which should be a mixed bag of deposits, debt fund, govt. securities, gold and equities. The only need is to balance them prudently and with this kind of blend you will be able to achieve your post-retirement aspirations.
- Your Provident Fund won’t suffice: Many people have this tendency of contributing more money towards PPF and EPF’s with the belief that they can retire in peace. But this is far from what actually happens, there is more to be done than just collecting PPF and EPF’S as they will not be enough to ward off inflation.
- Vesting Age: You should go with the Pension plans with vesting age which go parallel with your needs. There are some plans with vesting age starting from 40 years and there are some which starts from 80 years. So if you want your income stream early in life then go with the former plan on the other hand if you plan to retire late than the latter suits you better.
- Assured Benefits: Go for a plan that gives you higher of “Sum assured” with accrued benefits and assured bonuses.
- Death Benefits: Opt for a plan that provides you with a minimum payment on death i.e. 100% reimbursement of premiums.
- Prefer a suitable annuity option: You should go for an annuity option that is most suitable to your needs. For e.g., some annuity schemes that guarantees annuity for a certain number of years even after the death of the policy holder or other which gives out pension till the policy holder is alive and then after to their spouse.
- Plan Your Finances and Expenses: You need to always remember that more money you lose towards expenses the less you save towards retirement. Therefore go for options where expenses are competitive.
Do you want your do-anything-you like years go peacefully and happy?
Then start building your Financial corpus today. Right now!! The Larger the Better!!
