Is this the right time to invest in a Pension Plan?

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As the year 2019 is coming to an end, it was time for us to check our finances and investment. As I was discussing it with a friend, she asked if I had invested in a pension plan. I am in my mid-thirties and so I just laughed at her suggestion, thinking that she was joking.

“I am too young to be thinking about retirement,” I said.

But she seemed pretty serious about it. “Did you know early savings for retirement always helps you save some bucks in investment?” she added.

This got me thinking. I never had really thought about retirement or savings for years after retirement. I did some quick research on this and realized a few important benefits of saving early in a pension plan.

pension plan- when is the right time to invest?

What is a Pension Plan?

Pension plans offer the dual benefits of retirement corpus with insurance. These are specially designed to offer you financial independence post your retirement as well. You can invest a certain amount over a period of time towards the pension plan corpus and accumulate the fund in a phased manner.

Benefits of the Pension Plan

Guaranteed Income after retirement

With inflation and increasing costs, it will be tough to maintain a similar lifestyle after retirement. Keeping a small amount away for pension every month will help in a guaranteed income after retirement. There are a few plans that continue paying the amount to the nominee even after the pension holder’s death and a lump sum amount is paid to the children once the nominee is no more.

Tax Benefits

Saving in pension plans today is covered under 80CCC and 10A, thereby helping us get tax benefits today. So this is a win-win for salaried employees as they get tax benefits today and guaranteed future income after retirement. 

Liquidity

There are some plans that allow withdrawal from the corpus after a stipulated time. This means that you have some corpus to fall back on in times of emergencies. 

Can invest Early

The minimum age to start investing in a pension plan is 30 years! The current pension plans have a minimum vesting age of 45 years. Vesting age means that you can start receiving a pension amount from the age of 45 years! This helps you to plan for partial retirement or early retirements without hampering your life goals.

Benefits of Compounding Interest

The simple logic here is that the earlier you start investing, your money will have more time to grow however later you invest, you will need to invest more money to reach a similar target.

I had always thought that retirement would usually be covered with the provident fund. But considering the inflation, the rising cost of living and education I know I was wrong. Investing in a pension plan seems like a great alternative for salaried people to secure their future. I have decided to pay heed to my friend’s advice and pick a pension plan this financial year, what about you? What are your thoughts about pension plans and have you considered it? Would love to know your views about it.

Disclaimer:- I am not an investment expert. This post is written for educational and promotional purposes only. Do read all the offer documents carefully before investing. Also, consult an investment expert before deciding on any plans

Post Author: nehagpatwardhan

Neha Tambe is a freelance social media marketer, writer and influencer. I studied mass communication and worked in various capacities spanning from journalism, copywriting to social media marketing. Blogging from the past 4 years. Founder and Owner of nehatambe.com.

18 thoughts on “Is this the right time to invest in a Pension Plan?

    Cindy Dsilva

    (January 8, 2020 - 9:36 pm)

    I think I have to start working now in order to start saving for myself because people already calling my life a retired life. Lol. Housewife life is misinterpreted in so many ways I tell you! 😩

    Pragnya Mishra

    (January 10, 2020 - 3:50 pm)

    Once I crossed 30 our financial advisor elaborated us about pension plans options and we took one for me. Reading this post it reminded me of all the right reasons I took the decision on.

    Shalu

    (January 10, 2020 - 5:07 pm)

    Ever since I started working, on advice of my dad, I started investing in all right avenues. Thankfully that made me financially secure in the long run & is a great backup to fall back on during rainy days. Very informative article.

    Snehalata Jain

    (January 11, 2020 - 3:29 am)

    So far we haven’t thought about saving for retirement ,I guess many of us don’t want to even think about that..LOL. But seriously I feel it’s the right time now to plan something and your post is an eye opener to reality.Need to consult an financial adviser sooner than later.

    Deepika

    (January 11, 2020 - 3:37 am)

    Yes! You are right. Considering the inflammation we need to focus more on our financial planning. And My big yes for the early pension plans. I am also thinking to go for a pension plan in the next couple of years.

    Tina Basu

    (January 11, 2020 - 7:05 am)

    Pension plans are also quite important for a secure future. With steep prices of everything. It is good to have a plan ready.

    Anahita Irani

    (January 11, 2020 - 9:34 am)

    Glad I came across your blogpost, it explains the need for a good pension plan. I was actually planning to get it in place before March 2020

    Ujjwal Mishra

    (January 11, 2020 - 9:46 am)

    I am planning to get one such plan, was unsure about how to choose thanks to you now i have clarity.

    Surbhi Prapanna

    (January 11, 2020 - 11:41 am)

    Great informative post about benefits of pension plans, i had heard about it before but got to know so many new points through your post. Thanks for sharing.

    Ruchi Verma

    (January 11, 2020 - 5:43 pm)

    We have done some investment and retirement planning..it’s important to realize and do such plans for future!!

    Roma

    (January 11, 2020 - 10:03 pm)

    That’s so very well explained buddy, I am going to use this information to my benefit

    Debidutta Mohanty

    (January 12, 2020 - 1:01 am)

    A pension plan is definitely essential to make your future safe and protected from rising inflation and financial uncertainties.

    Jhilmil D Saha

    (January 12, 2020 - 2:04 am)

    It is an absolute necessity to invest in pension plans from early. Even if we earn well, after rerirement the income will not be similar so we have to invest.

    Varsh

    (January 12, 2020 - 6:25 am)

    It is never too early to invest in a pension plan. For a better and secure tomorrow one must start planning today itself.

    Charu

    (January 12, 2020 - 9:27 am)

    Me and my hubby were just discussing about this yesterday. It’s always good to invest in such plans. Reading your post just reassured us that we were thinking in the right lines.

    Charu

    (January 12, 2020 - 9:27 am)

    Me and my hubby were just discussing about this yesterday. It’s always good to invest in such plans. Reading your post just reassured us that we were thinking on the right lines.

    Dr Bushra

    (January 12, 2020 - 10:50 am)

    I’m looking to invest in pension plans this post clear many doubts about it.

    Kavita Singh

    (January 12, 2020 - 12:33 pm)

    This is exactly what I was discussing with our financial planner last week. It is an absolute must to invest in such plans especially for the people with private jobs 🙂 You have cleared a lot of doubts of mine.

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