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A retirement plan provides long-term financial security by ensuring a steady income after retirement. You can grow your savings with an ... annuity plan and a pension policy. Maintaining a stable lifestyle is easier with the best retirement plan in India, as it covers various expenses, including medical bills, groceries, and emergencies. By choosing the right retirement and pension plans in India, you can ensure financial freedom and peace of mind after you retire.
Pension Calculator
Pension Calculator
The purpose of retirement plans is to provide you with a reliable income stream even after you stop working. There are two general types of pension plans:
Pension Plans:
Annuity Plans:Non-Participating, Unit Linked, Individual Life Insurance Pension Plan
(UIN: 110L182V01)
Tata AIA
A Non-Linked, Non-Participating, Annuity Plan
(UIN: 110N161V10) | 3T&C apply
Retirement calculators are online tools that calculate how much wealth you'll need when you retire. It also helps you plan investments based on your retirement corpus requirements.
In general, it serves two purposes:
It shows you how much funds you will need after retirement to maintain your current lifestyle.It helps you estimate the returns on your investments and how much you need to invest for retirement.A retirement plan policy is important in India because of rising inflation, changing family dynamics, and the absence of social security. The following are reasons why you need a retirement plan:
Unexpected layoffs, stress-related health issues and high work stress make Indians consider early retirement. It is important to consider the financial, emotional, and psychological challenges involved in early retirement. If you retire early, you should have a sufficient retirement fund to ensure peace of mind. Depending on your age and financial needs, you should choose the best retirement plan to build an adequate corpus.
It's expected that healthcare costs will go up in India. Having no employer healthcare after retirement will require funds to cover medical expenses. Despite an individual health insurance covering major expenses, you'll need some funds for long-term care and associated medical costs. Such costs can be covered by a pension or retirement plan.
Life expectancy is expected to increase further in India with improved living and healthcare standards. Having a long-term retirement plan will help you ensure you have sufficient funds to take care of your financial needs after retirement.
Inflation gradually increases the cost of goods and services, which means your current savings may not be sufficient in the future. Even as costs rise, you can increase your wealth and keep your level of living by investing in retirement plans. You can avoid financial stress after retirement by planning and making sure you are able to cover both essential and discretionary expenses.
There are tax deductions for retirement plans like Public Provident Funds (PPF), National Pension Systems (NPS), Employee Provident Funds (EPFs), and life insurance plans under Section 80C, Section 80CCD, and Section 10(10D) of the Income Tax Act.
Government-funded pensions are not available to all citizens in India. The majority of citizens need to fund their post-retirement life through personal savings, employer-sponsored plans, or retirement plans.
Starting a retirement plan helps secure your retirement years, mitigating the impact of rising costs and offers financial independence.
Inflation rates have increased the living expenses dramatically over the years. This means you need to account for future living expenses and accumulate a significant amount of savings to sustain yourself over your retirement years.
Here are some reasons why a retirement pension plan could be the reliable solution to living a stress-free lifestyle in your post-retirement years:
It is a disciplined, affordable, and secure method of retirement planning that can be started at any time.You are offered a guaranteed3 income after retirement to cater to your financial needs.You can secure your family members in the form of a death benefit along with your retirement savings.You can choose between investing in a market-linked pension plan or a conventional pension plan, depending on your investor profile.
Pension plans in India are designed to help you accumulate savings during your working years, ensuring a steady income after retirement. These plans generally have two key phases:
In this phase, you make regular premiums towards the pension plan. Over time, these investments grow through compounding, helping you build a retirement corpus. With Tata AIA pension plans, the payments can be a one-time lump sum payment or regular/limited payments equal to the policy term. These are paid to your account to accumulate interest over time.
Once you reach the predetermined retirement age (commonly 60 years), known as the vesting age, you start receiving regular pension payments in the form of an annuity from the accumulated corpus. You have two choices when you reach this phase: Start receiving your pension payouts or withdraw your earnings and buy an annuity plan.
The annuity plan must be bought from the same insurer you bought your pension policy from. Moreover, the minimum vesting age in India is 30 - 40 years, while the maximum vesting age is 80 years. As a policyholder, you can choose any appropriate vesting age between the minimum age and the higher limit to start getting the benefits.
Some of Tata AIA's pension plans also allow you to increase your annuity through top-up premiums. Namely the Tata AIA Fortune Guarantee Pension.
Let’s say
Pension Plan |
Description |
Deferred Annuity |
In this plan the pension starts after the completion of the policy term. |
Immediate Annuity |
Under this plan, the pension starts immediately after a lump-sum amount is paid to the insurance company. |
Life Annuity |
The policyholder receives regular pension payments throughout their lifetime. If chosen Joint life, the spouse continues to receive the pension after the policyholder's death. |
Unit Linked Pension Plans (ULPP) |
These are market-linked pension plans some portion of the premium is invested in various market to generate returns. |
Guaranteed Period Annuity |
This plan provides pension payments for a fixed period, such as 5, 10, 15, or 20 years, regardless of whether the policyholder survives the entire period or not. |
Annuity Certain |
The policyholder receives pension payments for a specific number of years. If the policyholder passes away during this period, the remaining amount is paid to the nominee. |
Public Provident Fund (PPF) |
PPF is a government-backed long-term savings scheme that offers fixed returns, tax benefits, and a lock-in period of 15 years. |
Employee Provident Fund (EPF) & EPS |
EPF offers retirement savings with fixed returns through contributions from both the employee and employer. EPS provides a fixed monthly pension after retirement. |
National Pension Scheme (NPS) |
NPS is a government-backed pension scheme where contributions are invested in equity and debt funds. |
Pension Funds |
These long-term retirement plans are regulated by the Pension Fund Regulatory and Development Authority (PFRDA) and allow partial withdrawals during emergencies. |
Whole Life ULIPs |
This plan keeps money invested throughout the policyholder’s life. Partial tax-free withdrawals are allowed after retirement to meet financial needs. |
Defined Benefit Plans |
These plans guarantee a fixed retirement income, calculated based on the employee’s salary and years of service. |
Defined Contribution Plans |
In this plan, the employee and employer contribute a fixed amount. The final retirement amount depends on the contributions made and the investment returns earned. |
A Deferred Annuity plan allows individuals to build a retirement corpus over time, by making regular or lump-sum premium payments. The pension or annuity starts only after the completion of the policy term. This plan is suitable for those who want to accumulate savings over the long term and start receiving regular income after retirement.
With an Immediate Annuity plan, the policyholder receives pension payments immediately after paying a lump-sum amount to the insurance company. This plan is suitable for individuals who have a retirement corpus ready and want to start receiving regular income without any waiting period.
Under a Life Annuity plan, the policyholder receives pension payments regularly for as long as they live. If the policyholder opts for the 'with spouse' option, the pension continues to be paid to the spouse after the policyholder's death, ensuring financial security for both.
This plan provides pension payments for a fixed period such as 5, 10, 15, or 20 years. These payments are made irrespective of whether the policyholder survives for the entire period. If the policyholder passes away during the guaranteed period, the payments continue to the nominee or beneficiary.
An Annuity Certain plan allows the policyholder to choose a specific period during which pension payments will be made. If the policyholder passes away before the completion of this period, the remaining payments are given to the nominee, ensuring the family’s financial stability.
PPF is a government-backed savings scheme that offers fixed returns with complete tax benefits. It comes with a lock-in period of 15 years, making it suitable for long-term savings and retirement planning. PPF provides secure, tax-efficient growth for individuals seeking low-risk investment options.
EPF is a retirement savings scheme where both the employee and employer contribute a fixed percentage of the employee's salary. EPF offers fixed, government-backed returns. A portion of the EPF contribution goes towards EPS, which provides a fixed monthly pension after retirement. These schemes are compulsory for many salaried employees and help build a stable retirement corpus.
Pension Funds are long-term investment schemes regulated by the Pension Fund Regulatory and Development Authority (PFRDA). These funds aim to provide better returns upon maturity compared to traditional options. They also allow partial withdrawals during the accumulation stage, which can be useful during financial emergencies.
Whole Life ULIPs (Unit Linked Insurance Plans) keep the money invested for the entire life of the insured person. They combine life insurance coverage with market-linked investments. After retirement, partial tax-free withdrawals can be made to meet financial needs, offering flexibility and long-term wealth creation.
Defined Benefit Plans guarantee a specific retirement income based on a formula that considers the employee's salary and years of service. The employer is responsible for funding the plan and bears the investment risk. These plans provide stable, predictable income after retirement.
In Defined Contribution Plans, both the employee and employer contribute a fixed amount towards the retirement fund. The final retirement amount depends on the total contributions made and the investment returns earned over time. Unlike Defined Benefit Plans, the final pension amount is not fixed, but these plans offer more transparency and flexibility.
The NPS is a government-backed pension initiative that invests contributions in a mix of equity and debt funds to generate market-linked returns. At the time of retirement, 60% of the accumulated corpus can be withdrawn, while the remaining 40% must be used to purchase an annuity that provides regular income. It is suitable for individuals seeking a low-cost, long-term retirement option.
Here are some prominent features of retirement pension policies from Tata AIA:
When you invest in a retirement pension plan, you receive a regular income as per the plan of your choice.
For example, in the case of a deferred annuity plan, you begin receiving the fixed, regular income at a later date (post deferment period), while in an immediate annuity, this benefit is paid out soon after you start the investment. A retirement calculator can be a useful tool to help you calculate this amount.
Pension plans in India are eligible for tax4 deductions under applicable tax laws. This specific tax deduction will depend on the type of retirement pension policy you choose.
Most plans offer tax deductions on your annual premium payments, allowing you to reduce your taxable income in the year you make contributions. Under some plans, your investments are tax-exempt, allowing them to grow without immediate tax consequences. Moreover, death benefits received from a pension policy due to the insured person's death are tax-exempt.
The time during which you get the benefits of your pension plan is known as the payment or payout period. If you choose to receive payments between the ages of 65 - 80, the payout period will be 15 years.
In some pension plans in India, you can choose the payout/income period as per the options under the plan. At Tata AIA, you can opt for a Life Annuity under our plans, where you will receive payments for as long as you live.
Tata AIA pension plans allow annuitants to get a loan against their policy. The terms under which you can get avail loans are subject to policy conditions. For example, under a Joint Life option in our Fortune Guarantee Pension Plan, the primary annuitant can take a loan six months from the commencement date. If the primary annuitant dies, it can be availed by the secondary annuitant.
As stated, upon policy maturity, you can opt to withdraw the pension plan benefit or purchase an annuity plan. Some annuity plans also offer a return on the purchase price. This means the benefits of your pension plan will also include the purchase price which was paid for the annuity plan.
This is an amount the insurance company will pay you if you ever decide to "surrender" or discontinue your plan before it reaches maturity. In simple terms, you can choose to cash out your pension policy.
This amount will be stated in your policy wording and available only if you have held your pension plan for a minimum number of years. Remember to check your policy terms before purchase to ensure you get properly compensated if you want to discontinue your policy.
Under your retirement pension plan, you will begin receiving guaranteed3 income benefits from the distribution phase. This means you do not need to worry about any delays in getting a regular income stream once you retire.
In case of your untimely demise, any applicable death benefit under your pension policy will be paid out to your family. In the case of a Joint Life annuity plan, the second annuitant continues to receive the annuity after the death of the first annuitant.
Most pension plans in India offer flexible premium payment modes and terms you can opt for under your policy. This way, you can pay when you can at your desired frequency. Tata AIA pension plans offer Single/Regular/Limited payment modes.
Once you retire, your pension policy steps in to help you afford daily expenses in place of your salary. These pension payouts can be received as a lump or monthly income to ensure your savings last throughout your retirement.
The best retirement plans in India offer several different tax deductions and exemptions depending on the type of pension policy you buy. This means Tata AIA pension plans are also eligible for tax4 benefits under applicable tax laws.
Though your retirement plan should be able to suffice for all kinds of emergencies, you can still enhance your policy coverage with optional rider benefits. Keep in mind that any additional top-ups or add-on riders will require additional premium payments under your policy.
Below is a comparative overview of the Tata AIA Fortune Guarantee Pension Plan and the Tata AIA Smart Pension Secure Plan:
Parameter |
Tata AIA Fortune Guarantee Pension Plan |
Tata AIA Smart Pension Secure Plan |
Premium Mode |
Single premium and limited/regular premium options |
Regular premium payment only |
Annuity Type |
Immediate and Deferred annuity options available |
Deferred pension plan (benefits at vesting/maturity) |
Features |
Multiple annuity options:
|
Offers:
|
Returns |
Guaranteed annuity payouts for life |
Market-linked returns via unit-linked funds (ULIP-based) |
Tax Benefits |
Eligible for tax benefits under Section 80CCC/80C and 10(10A), as per prevailing laws |
Eligible for tax benefits under Section 80C and 10(10D), as per prevailing laws |
As a general rule, you should be saving at least 15-20% of your income for retirement. When saving for retirement, you should consider a tentative figure that will account for all essential and emergency expenses for yourself and your family. While this will give you a basic idea of the total amount to be accumulated, here are some points that will give you a better understanding.
When you retire, some expenses will cease, while there may be some new ones. Your daily travel to the workplace will stop, saving you some money; however, a minor health condition may be an added expense. Listing down all of these missing and added expenses can help you know the approximate amount needed for your retirement savings.
Along with a pension plan, if you have other funds like an Employee Provident Fund (EPF) that can provide you with some income, consider them. However, since your pension plan will cover a majority of your basic and emergency expenses, this additional income is meant to help you plan your retirement corpus.
Just because you retire does not mean your family has to change their lifestyle to accommodate for the loss of income. Your retirement plan should be able to provide you with the same comfortable lifestyle that you enjoyed on a regular salary. Therefore, invest in your pension plan such that you’re able to provide a comfortable life to your loved ones and yourself.
Your current salary may be enough for your family, but years later, when you retire, the value of your current salary will not be the same. The inflation rate will help you calculate how much income you need to have, over and above your current income, to handle all your post-retirement expenses, any additional costs as well as any financial emergencies. We also recommend diversifying your savings across different options like EPF, PPF, NPS, and mutual funds. However, if you want more concrete estimates, use Tata AIA's retirement planning calculator.
Anyone who wants to maintain their standard of living and enjoy a steady income once they retire should can consider getting a Tata AIA pension plan. Here are some:
The earlier you start saving, the more you will save. It may seem too soon to start thinking about retirement in your 20s, but if you start saving now, you can easily build a large retirement fund.
If you are in your 30s and want to ensure your family's financial future, investing in a pension plan can help. In your 30s, planning for retirement is still a good idea, even if you are single or have no dependents.
Your investment profile will determine which retirement pension policy suits your future needs while maintaining your current standard of living.
People usually start thinking about retirement when they are in their 40s. There are also a few major expenses or financial obligations that need to be considered at this stage. Consider getting a pension plan that offers a guaranteed benefit or invests in less risky assets.
It is possible to purchase the best retirement plans in India until the age of 70. By this stage, you are likely to have accomplished your financial goals and have no significant financial obligations.
If your children are financially independent, you can still opt for a pension plan to ensure they leave you a financial legacy. If you are still employed, you can invest a lump sum into a deferred annuity plan for immediate pension payments. Additionally, look into pension plans that offer death benefits.
To use the Tata AIA Life Insurance retirement planning calculator, you need to follow the steps given below:
Visit the official Tata AIA Life Insurance website and Select “Calculators”.
Go to the “Retirement Calculator” page and fill in your details correctly.
Submit the details to proceed with the next steps.
You can then select your current age, the expected retirement age, your monthly expenses, expected return on investment and other factors.
After submitting these details, you will be able to know how much funds you need for your retirement savings.
Monthly Expenses Post-Retirement
Inflation-Beating Returns
Cover Medical Emergencies
Assets and Income Sources
Research Your Options
Plan Ahead of Retirement
Assess Your Risk Tolerance
The following are the eligibility criteria for a retirement plan in India:
Entry Age: Generally, pension plans require you to be 18 years old. However, some require you to be 30 years old. There's usually a maximum entry age of 75-80 years.Premiums: Premiums are the regular amounts paid by the policyholder throughout the policy period. At the end of the tenure, maturity returns are determined by the regular premiums paid.Vesting Age: A policyholder's vesting age is the age at which they begin receiving their pension, which is typically set at 40 years of age, but can vary depending on the insurer.The following is the list of documents that you need to buy a pension plan in India:
Here are some of the important benefits of purchasing a pension plan online:
When you buy a pension plan online, you can easily compare the plans alongside and look through the features, benefits and exclusions of all the plans before you choose a suitable one and purchase it.
The online purchasing process is quick and easy, which means you can get your policy in a matter of minutes. And since there are no overhead costs of an online purchase, you can benefit from discounts when you buy the policy online.
Since the policy document is online, there is no chance of you misplacing the policy like you can lose the hard copy. If you do happen to lose the hard copy, you can easily access the online soft copy or even save it on your device.
Your insurance provider’s customer service can offer you 24/7 support for your feedback and queries when you buy online. You can reach out to them or leave them a query, and they can resolve it in a few minutes for a swifter process.
Buying online means that you do not need to use any papers for your policy document. This not only saves you from a lot of physical clutter but ensures a green and environment-friendly process for everyone.
Before you buy a policy online, the necessary research such as knowing your insurance provider’s claim settlement ratio, reading their reviews and knowing their products can be done quickly and easily online.
Plan a budget for your retirement plan after you determine your post-retirement needs, expenses, and family needs. Once you have this amount, you can buy a pension plan that lets you invest it and receive it at your convenience.
Take into account your income and financial situation. With your chosen retirement plan, you should be able to invest and pay premiums comfortably. Make sure your retirement corpus covers your future expenses and your family's needs so you do not end up with inadequate funds.
If you have additional income from other sources, such as a business or property, you still need a pension plan for your regular expenses.
However, it is important to know that the other income sources attract taxes while your retirement plan premiums will be eligible for tax benefits4 under Section 80C of the Income Tax Act.
If you need an immediate income upon investment, an immediate annuity plan can be a good choice.
However, if you are planning in advance, you can choose a deferred annuity plan where you can pay the premiums over the policy term and then receive the benefits during the vesting period.
After evaluating all your income sources and liabilities, you can estimate the size of your retirement corpus. Next, browse our catalogue to see which retirement plans best suit your needs. Check investment amount, guaranteed3 payouts, other returns, and loan facilities of the plan. You can find all of this information in the policy brochure and policy wordings.
Tata AIA offers immediate and deferred annuity plans. You can make Single or regular payments under the policy and upon retirement, the annuity plan will offer annuity amount as per the mode chosen.
These are low-risk retirement plans that offer guaranteed3 returns under three different options – lump sum (endowment), regular income, and whole life income. Since the returns are not market-linked, you get an assured amount on retirement.
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