All you want to know about pension plan

1. How pension plan works?

Pension plans are also known as retirement plans for your future financial stability during your old age. With ever increasing cost of living it has become important that you make arrangements for your retired life. When you continually invest in this plan it grows with the compounding effect.

2. Who can opt for a pension plan?

This policy is suited for people who want to secure future and for senior citizens, and it would be best time to invest in it when you are earning.

3. What is a personal pension plan?

This is a pension policy which is invested in funds that are chosen by you according to the amount of risk which you can take and future plans. There is no involvement of employer.

Pension schemes offered by the life insurance companies are of two different types. One is deferred annuity plan and other is immediate annuity plan. Deferred annuity or pension schemes are meant to create retirement corpus by depositing some regular income every year. Immediate annuity gives you monthly payment as pension for which you have to deposit lump sum with the life insurance companies.

4. What is a work based pension plans?

Work based pension plan is set up by the employer to save for retirement of employee, and the employee's contribution is directly collected from his salary or wages.

5. How is the pension plan different from money back insurance policy?

• Pension plan are meant for the later stage of life i.e. old age and retirement, while money back plans can be used for expenses like child education, marriage, purchase of property.
• The sum assured in pension plan is received only during the later stage, whereas the sum assured in money back is received at regular intervals.
• The tax benefits are avail in both pension plan as well as money back plan