Priyank, you are clear that you want a pension. Let us look at the confusing usage of the term pension plan in India. Below is an excerpt from my blog article.
There is a level of ambiguity in the usage of word ‘pension plan’ in India. Most of the schemes that have the word pension in them are in fact ‘accumulation plans’. The ‘investor’ – if you can use that word – makes periodic purchases to build up a corpus. During the accumulation period, the investments are managed by the scheme provider to generate a level of returns. At the time of retirement, the distribution phase begins. The final corpus is a combination of the purchases and the returns. This corpus – or a part of it – is actually used to buy an annuity. It is this annuity that actually provides a pension!
There are many annuity schemes in India. Typically they are provided by the life insurance companies. The government provides a scheme called PMVVY that offers a good annuity rate - the limit of corpus is 15 lac per senior citizen. The scheme would provide pension for 10 years and after that the purchase price would be returned.
The annuity plans from insurance companies have a large variety of annuity options. Almost all of them provide the pension lifelong, and many return the purchase price to the nominee. Of course the annuity amount depends on the option chosen. Here is a sample list of options:
Option A: Immediate Annuity for life.
Option B: Immediate Annuity with guaranteed period of 5 years and life thereafter.
Option C: Immediate Annuity with guaranteed period of 10 years and life thereafter.
Option D: Immediate Annuity with guaranteed period of 15 years and life thereafter.
Option E: Immediate Annuity with guaranteed period of 20 years and life thereafter.
Option F: Immediate Annuity for life with return of Purchase Price.
Option G: Immediate Annuity for life increasing at a simple rate of 3% p.a.
Option H: Joint Life Immediate Annuity for life with a provision for 50% of the annuity to the Secondary Annuitant on death of the Primary Annuitant.
Option I: Joint Life Immediate Annuity for life with a provision for 100% of the annuity payable as long as one of the Annuitant survives.
Option J: Joint Life Immediate Annuity for life with a provision for 100% of the annuity payable as long as one of the Annuitant survives and return of Purchase Price on death of last survivor.
As of now, here is the comparison of typical 'returns'
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Contact SrinivasanPriyank, you have not mentioned your age. So it is not clear whether you are far away from retirement, near retirement or already retired. If you are near retirement and already retired then this answer is for you.
Since you have mentioned "assured" returns, I assume you mean low-risk and stable returns. SR Srinivasan has already touched upon annuity plans and Pradhan Mantri Vaya Vandana Yojana(PMVVY). Here are a few more:
Senior Citizens' Saving Scheme (SCSS)
SCSS is available only to senior citizens (above 60) or early retirees. You need to visit a bank or post office to avail this scheme. Early retirees can invest in SCSS, provided they do so within one month of receiving their retirement funds.
Government of India (GoI) Savings Bonds
These bonds are issued by RBI.
If you have exhausted your SCSS limit, then go for GoI bonds next.
Post Office Monthly Income Scheme (POMIS)
POMIS is a government backed scheme.
Bank fixed deposits (FDs)
A bank fixed deposits (FD) is another popular choice with the retirees. Although the interest rates are lower than SCSS, POMIS or GoI bonds, FDs score highly on ease of availing and flexibility in tenure. Instead of locking funds for a particular duration, an investor may spread the amount across different maturities.
Sachin Shah is a 30 year old Senior Software Engineer, working at an IT services company in Bengaluru. He and his wife want to plan for their retirement and also want to save for their child's education, wedding and for buying a car.
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