All of us are worried about our income when we retire. Pension Plans, also called Retirement Plans are one of the safest and surest ways of a trouble-free retirement life. Invest small amounts today while you are earning and receive fixed annual payouts during your retirement years. It is best to start planning for your retirement as early as possible because these small amounts contributed today will become a large sum of money over the years.
Pension Plans are flexible and can be used effectively if planned out well. On attaining the retirement age, the policy holder can withdraw 33% of the maturity amount for some immediate financial needs. The balance amount is used to purchase an annuity which gives a regular monthly/annual income.
Pension Plans come in 2 variants - Traditional plans in which the amount of payout is guaranteed and ULIPs in which part of the amount paid as premiums every year is invested in financial instruments which are known to appreciate greatly over a long period of time.