In India there are a host of best pension plans and retirement plans in India. These include from the likes of SBI, LIC and a host of other private sector insurance companies.
Should you buy a retirement or pension plan?
Several analysis done by investment experts suggest that these pension or retirement plans are a complete waste of time. Some analysts estimate that the returns can be as low as 4 per cent and can go up to as much as 6 per cent in the best case scenario. The tax implications are also ambiguous and difficult to understand.
A look at some of the best retirement or pension plans on offer
While, it's always a difficult proposition to analyse the best retirement plan on offer, we feel that the SBI Life - Retirement Smart is a good option. We would not want to say its best, but, the features look reasonably good. Here's why?
SBI Life - Retirement Smart
SBI Life Retirement Smart offers a few benefits that are a little unique. The plan offers you a guaranteed additions that can go up to 210 per cent of the annual premium that you have paid.
Apart from this there is a guaranteed addition of 10 per cent of the annual premium which commences after the end of the 15th policy year.
In case there is a death there is a terminal addition of 1.5 per cent that the fund gives on its fund value, also in case of maturity. There is also a guarantee of 105 per cent of all premiums paid in case there is a sudden death. Another important feature is that there is a flexibility in case you desire to postpone your vesting age.
LIC's New Jeevan Nidhi
In the LIC Jeevn Nidhi if you have kept the policy in force the corporation will on vesting give you an amount equal to the Basic Sum Assured along with accrued guaranteed additions. Apart from this you would also receive vested simple reversionary bonuses and final additional bonus, if any.
What happens in case there is a death?
In case the policy holder dies during the first five years of the policy, LIC would pay the basic sum assured along with accrued guaranteed addition in the form of an annuity or partly in lump sum and balance in the form of an annuity to the nominee.
In case there is a death after first five policy years and provided the policy is in full force, the corporation would pay the basic sum assured along with accrued guaranteed addition, simple reversionary and Final Additional Bonus, if any, shall be paid as lump sum or in the form of an annuity or partly in lump sum and balance in the form of an annuity to the nominee.
As mentioned earlier, the returns on these policies are not too great. You can earn a higher interest rate elsewhere, if you invest your money. Today, fixed instruments can give you returns of as much as 10 per cent per annum on pre-tax basis. The one advantage of pension plans though is that they offer you some decent life cover which others are not able to offer you.
In case you have a decent life cover, you may want to skip pension plans altogether.