Pension Options For The Newly Retired People in India


During our working lives we have lots of hopes and excitement about life post retirement. Throughout our lives we have been working hard both in student life and professional life and thus, we want our retired life to be a blissful phase wherein we can actually live to pursue our hobbies and have a relaxed life. To be able to lead a quality retirement a good financial planning is needed as your active income stops post retirement and certainly you don’t want to depend for your needs on your children. Money in your hand is required for you to enjoy your post retirement years. The ideal situation is when you are in a position to buys gifts for your grand kids without worrying for money and are able to fund your hobbies too.

Imagine yourself in your 60’s and enjoying a morning beverage with your spouse in the garden of your house planning your next vacation. This is the dream for which you have toiled for your entire life. Award yourself a beautiful old age by planning wisely now.

One of the popular schemes that you should invest in is pension plans or retirement plans offered by life insurance companies.  A retirement plan answers every financial conundrum that retirement may pose. There are exciting retirement plans on offer and can build a good amount of corpus that should last throughout your post retirement years.

Retirement or pension plans help you enhance your savings for a secure future by converting your savings into lifetime income source for post retirement life. You should compare pension plans of various companies before buying.

Apart from pension/retirement plans offered by life insurers, there are a range of investment and financial schemes to further your cause of a dream retirement. Some of the popular ones are discussed below.

  1. Post office Monthly Income Scheme

This is a very effective scheme to ensure a safe, simple and sure way to receive monthly income by retired persons. These plans require retirees to invest their lump-sum retirement benefit and earn risk free interest as high as 8.4%. The payout of interest is monthly with auto credit facility. Maturity period is usually 5 years. This plan is ideal for government sector employees who get a lump-sum gratuity on retirement. Under this scheme the minimum investment should be INR 1500 and maximum investment goes up to INR 4.5 lacs for a single account and INR 9 lacs for a joint account.

  1. Senior Citizen Saving Scheme

This scheme offers a high interest rate of 9.5% per annum with quarterly interest payout. Any resident individual who has attained the age of 60 years is eligible to open this account. A joint account can be opened but only with spouse. Tax benefit under section 80C is available under this scheme. This scheme also allows premature closure.

  1. NSC (National Saving Certificate)

Any resident Indian can buy a National Saving Certificate. You can choose the amount up to which you want to invest in an NSC but denominations are designed by the government.  Maturity period is 5-10 years and interest rate is based on the type of certificate bought. In these plans you have to re-invest on maturity and at retirement it will fetch monthly pension as NSG matures.

  1. Bank Fixed Deposits

Bank fixed deposits or FDs are one of the safest financial instruments which allow money to be deposited with the bank for a fixed duration ranging from 15 days to 5 years. The interest rate offered under FDs is much higher than what you get under conventional savings account. Senior citizens who invest in such schemes often get a higher interest rate than others and can receive regular return on offer. It is a safe and orthodox way to secure your old age.

  1. Reserve Mortgage

Retired people who own a house and don’t intend to pass it on to children may enter into a reverse mortgage with a bank. A reverse mortgage is an agreement with a bank wherein the house owner transfers the ownership of the house is automatically transferred to the bank after the death of the house owner. In return the bank pays a monthly income to the house owner throughout the remaining life of the house owner. It is a beautiful scheme in which a regular monthly income is received by the retiree and he gets to live in his own house with full authority till the end of his life. According to the draft prepared by RBI any house owner over 60 years of age is eligible for a reverse mortgage.

The house owner can opt for monthly, quarterly, half yearly, and annually or lump sum payment at any point of time.

Plan now to reap the dividends later. Make your post retirement years the best years of your life. Those years should be spent in celebration of a life well lived.