Pension plans can act to be the cushion when individuals turn old and have to no regular source of income. These plans make sure that individuals do not suffer after their routine income comes to an end. The advancing years must be led free of responsibilities, both physically and financially. Pension lends a clear chance to invest and get lump sum savings in the form of an annuity plan on retirement.
A research by United Nations Population Division World’s life expectancy hopes for 75 years by the end of 2050. Both health and sanitation conditions are way improved now. As of now, the post retirement years’ rapidly changing with the times to come. This will be a combination of cost of living, expectancy and inflation that will make up for everyday life. To provide full social security, the Government is initiating National Pension System.
The Government of India founded the Pension Fund Regulatory and Development Authority external website, that takes care of the pension structure in the country. This gives an opportunity to save for retirement for as long as you desire.
Types of National Pension Schemes
NPS- National Pension Scheme started for new recruits initially, and now it can be provided for people of all unorganized sectors on voluntary basis.
Additionally, people will be persuaded to save their retirement money and the Central Government launched a co-contributory pension scheme called, ‘Swavalamban Scheme ‘ in the Union Budget of 2010-11. Under Swavalamban Scheme, the government with a contribution of of Rs.1,000 and maximum of Rs.12,000 per annum to each eligible NPS subscriber. This plan is presently applicable only upto F.Y.2016-17.
National Pension Scheme offers the following salient features to help subscriber plan for retirement in later lives:
- A unique Permanent Retirement Account Number (PRAN) will be allotted to a subscriber. This unique account number will stay the same for the subscriber’s remaining life. This unique PRAN can be accessed from any location in India.
PRAN provides access to 2 different personal accounts:
- Tier I Account: This is a non-withdrawable account meant for retirement savings alone.
- Tier II Account: This is a voluntary savings account. The subscriber is quite independent to withdraw savings from this account whenever he/she wants. No tax exemption is possible on this account.