Money Guru: Right planning for retirement makes life easier. If you also think so and are looking for a smart investment option for retirement, then NPS is one such option in which you can invest. Apart from this, investing in an annuity plan can also be the right decision. If you are still confused, What is NPS What are Annuity Plans? The experts Finsafe Founder, Mrin Agarwal, and Certified Financial Planner, Poonam Rungta explain this in a chat with Swati Raina in a popular TV Show Money Guru.

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What is NPS?
NPS Stands for National Pension System. In NPS, the benefit of pension is available after retirement. It is not market-linked and gives fixed returns. In this pension system, both the employer and the employee contribute. Withdrawals of 60% from the deposit amount are possible on retirement. But to take advantage of this, it is necessary to put a 40% amount in the pension scheme.

There are two investment approaches in NPS.
NPS-Auto Choice
Through Investment Cycle (LC) Fund
LC 75- Maximum Equity Investment 75%
LC 50- 50% of the total assets in equity
LC 25-Investment in Equity 25%

NPS-Active Choice
The subscriber has the freedom to choose.
Maximum 75% investment possible in equity
Can invest 75% till the age of 50
Equity investment from the age of 51 as per Annexure A
Up to 100% investment possible in corporate bonds
You can also invest up to 100% in government bonds

What is Annuity Plan?
An annuity plan is a type of insurance product for regular income. In this scheme, regular income is ensured in retirement. An annuity is typically a life insurance or pension payment. The person gets the amount in installments or in a lump sum. There is no fear of losing your deposit in old age in this scheme. The person taking the policy makes a lump sum payment. According to the need, some amount is available immediately or in installments.

How many types of Annuity Plans?
There are two types of annuities. One - immediate annuity, and the other - deferred annuity.
A lump sum amount is invested in a deferred annuity plan. In this, a monthly pension is available on retirement. Whereas in Immediate Annuity the payout starts immediately after the investment. This is a good option if you are nearing retirement.
The deferred can be converted into an immediate annuity, said the expert.

The expert said that the policyholder does not get any tax benefit on the annuity. Also, the payment has to be made for life or for a fixed period, it is in the hands of the holder.
LIC's Jeevan Akshay Policy - Immediate Pension Plan
LIC's Jeevan Shanti Policy- Deferred Pension Plan

Benefits of pension plan
There are many benefits of the pension plan. It is a good option for low risk and regular income. There is also the option of pension at a fixed rate throughout the life. You will have to pay a lower premium for starting early. You can start at any age. Apart from this, on death, the nominee gets the full amount of the investment.

NPS or Pension Plan
NPS gives better returns than pension plans. In NPS, there is an additional tax benefit of 80C. There is also a rule of premature withdrawal in NPS. Whereas the pension plan has a fixed interest rate. There is an option to choose annuity-like annual, monthly, etc. In the pension plan, the nominee also gets a lifetime annuity.