Pension Plan: Features & benefits
Pension Plan guide: features & benefits.
Here is what a good pension plan typically offers. Exact benefits differ by insurer and product, so always read the policy wording.
Accumulation and payout phases
You pay premiums or a lump sum during the accumulation phase and receive income during the payout phase.
Deferred or immediate annuity
Deferred annuities start income later; immediate annuities start income right after a lump-sum purchase.
Annuity options
Life annuity, life annuity with return of purchase price, joint-life annuity and increasing annuity are common options.
Guaranteed income for life
Annuity income continues for as long as you (or your spouse in joint-life options) live.
Death benefit in accumulation
The nominee usually receives the accumulated value or sum assured if you die before vesting.
Commutation
Some plans allow part of the corpus to be taken as a lump sum at vesting, subject to rules and tax treatment.
Tax benefits
Contributions and payouts are treated differently under various sections; the rules depend on product and tax regime.
Key terms to know
AnnuityVestingNPS (National Pension System)CommutationJoint-life annuityCorpus