Best Pension Plans 2017- Different Types of Pension Plans & Their Tax Benefits

wealthfundSimply put, pension plans (also referred to as retirement plans) are offered by insurance or investment (AMC) companies to help individuals build a retirement corpus. On maturity this corpus is invested for generating a regular income stream, which is referred to as pension or annuity. Pension plans are distinct from life insurance plans, which are taken to cover risk in case of an unfortunate event.

Below given are a few ideal investment options for senior citizens:

Senior Citizens Savings Scheme (SCSS)

  • Minimum investment limit in this scheme is Rs.1000
  • Maximum investment limit is Rs 15 Lacs
  • Qualifies for deduction under Section 80C of the IT Act
  • From a liquidity perspective, the scheme has a period of 5 years
  • Offers interest rate of 9%
  • Interest income is not tax-free for senior citizens.

Mutual Fund Monthly Income Plans

  • It is a type of debt oriented hybrid mutual funds
  • Offers regular income along with capital appreciation
  • It invest 20 – 30% of their portfolio in equities and 70 – 80% of their portfolio in fixed income securities
  • Offers high returns with stable income
  • Offers better liquidity than some other investment options.
  • Charge 1% exit load for redemption of units within one year of allotment
  • No exit load after one year of investment
  • Gives Tax efficient returns

Debt Mutual Fund Funds

  • Short term debt funds are suitable for investors with low risk tolerance
  • Offers stable returns
  • Invest in Commercial Papers (CP), Certificate of Deposits (CD) and short maturity bonds
  • Average maturities of the securities range from 2 – 3 years
  • Has offered around 9% of returns
  • No exit load after one year of investment

Senior Citizens Pension Plans (Varistha Pension Bima Yojana)

  • Offers highest return rates among all the annuity plans provided by different life insurance companies
  • It is an immediate annuity plan offering an interest rate of 9.38% to senior citizens
  • Offers Low liquidity in comparison to Senior Citizen Savings Scheme and Post Office Monthly MIS

Many young and old investors are attracted to Mutual Fund Monthly Income Plans due to its wealthfundlucrative benefits and returns. Its tax efficient returns make it catchier when compared to other traditional pension schemes. Investors, who are seeking good returns and capital appreciation and wish to invest in secure funds, can put money in various Pension plans. However, they must keep certain points such as, inflation, regular income flow, tax reduction etc. under consideration while choosing a fund to invest in. Want to discover more pension schemes? Visit and sign up.