The Different Types of Retirement Plans

Different Types of Retirement Plans
Conclusion

With retirement, we lose an avenue of regular income. To sustain our lifestyle, it is imminent we look for other ways and turn to our savings. Retirement plans help us do this in an efficient and effective manner. They let us plan and contribute to our future from an early age which in turn, is beneficial when we need it later in life.

Like any insurance plans, retirement plans should be chosen based on personal preferences and needs. There are a few types of retirement plans which have been discussed below.

Different Types of Retirement Plans

The following are the different types of retirement plans that are currently available in the market.

Government Pension Schemes

If you are a government employee, your safest and most convenient bet are the government sanctioned pension schemes. These retirement plans are regulated by the Government of India and its bodies like the Pension Fund Regulatory and Development Authority.

There are several government pensions schemes like employee provident funds, national pension schemes etc. The Atal Pension Yojana is also a convenient and efficient pension scheme from the Government of India. It is especially helpful for private sector employees who often do not receive any pension benefit from their employing organisations.

Employee Pension Schemes

Employee pension schemes are issued and regulated by a particular organization, for their employees. It is done in an effort to secure their financial interests even after retirement. An example of such a retirement plan are employee provident funds.

A monthly amount is regularly deducted from the salary and contributed towards the employee’s retirement plan. However, these cannot be purchased independently. They must be issued by your employer. Employee retirement plans can again be divided into three categories:

Defined Contribution Retirement Plans
Defined Benefit Retirement Plans
Hybrid Plans
Insurance-Retirement Plans

If you are unable to be a part of the above retirement plans, insurance-retirement plans are the one for you. These retirement plans are accessible to everyone regardless of their employment status. These can be purchased independently without the need to be employed to any particular organization.

Besides a pension component, these plans also have an insurance component. This essentially implies that there may be features like life cover and death benefits with this type of retirement plans. You can also add on riders according to your needs and circumstances.

Conclusion

Depending on which of these types is accessible to you, you can choose a retirement plan for yourself. They all have their benefits and are efficient in their own way. A retirement plan is quite essential if you want to live a stress-free life after you retire.