Have you ever wanted to invest for your future? One of the major investments required in the world today is in pension schemes. Apart from LIC pension plans in India, there are several offers given by other private companies that are unit linked. No matter how much you are earning, it is always preferable to get a pension plan for your future.
What are the major categories of pension plans?
There are two types of pension plans that one can invest in. We explain the two in detail below:
Deferred Annuity Plans: This is the most common way of selling pension plans. The mode of the pension plan includes paying a certain amount for x number of years till retirement. Once, you retire you will receive x amount as pension income.
Immediate Annuity Plans: This is one of those pension plans that are yet to gain momentum. The scheme allows the pension plan holder to receive annuity immediately on payment of the premium. So, if one intends on receiving a monthly pension with a lump sum amount, then an annuity plan will assure the person immediate pension.
There are advantages and disadvantages in taking either of these pension plans. Take a close look at the benefits that you are planning to take from these plans. For instance here are the disadvantages of the deferred annuity pension plans.
No growth for money: If you want your money to grow then, it would be advisable to go elsewhere. There are better options such as mutual funds or index funds that allow one to gain interest. One can invest in regular SIPs (Systematic Investment Plans) that give regular dividends in return. Some of the dividends are much better than the pension income.
Returns are not predictable: One of the greatest disadvantages of the pension plans is that the returns are not predictable. There is a large amount of ambiguity of the rate of return.
Despite its downfalls, investing in pension plans is the best way to go forward in case you are have not invested anywhere. You will not only be ensuring your future stability but also will manage the best for your retirement in case of any eventuality.