Retirement Planning is an important step to secure your future. When you stop working, you need an income that can meet your expenses.
Therefore, it is very important to plan for retirement now. In this article, we will learn in detail about the three major retirement plans – Atal Pension Yojana, National Pension System, and Post Office Monthly Income Scheme. These schemes provide you financial security in old age.
Atal Pension Yojana:
Atal Pension Yojana is a social security scheme launched by the Government of India in the year 2015. It is mainly designed for workers in the unorganized sector, but any Indian citizen can avail it. The main objective of this scheme is to ensure that every Indian gets a regular income in old age.
How does APY work?
- Eligibility: People between the ages of 18 and 40 can join this scheme.
- Contribution: You deposit a fixed amount every month. This amount depends on your age and the pension amount chosen.
- Pension: After the age of 60, you start getting pension every month
- Pension amount: You can choose a pension of Rs 1000, Rs 2000, Rs 3000, Rs 4000 or Rs 5000 per month.
- Government contribution: If you do not pay income tax and join the scheme between 2015-16 to 2019-20, the government deposits Rs 1000 every year in your account for 5 years.
What are the benefits of APY?
- Guaranteed pension: You get a guaranteed pension of the chosen amount.
- Low contribution: You can get a good pension even by depositing less money.
- Family protection: If you die, your spouse will continue to receive a pension.
- Flexibility: You can change your pension amount or even exit the scheme.
National Pension System:
The National Pension System (NPS) is a scheme that grows your money by investing it in the market and gives you regular income after retirement. This scheme is looked up by the Pension Fund Regulatory and Development Authority (PFRDA).
How does NPS work?
- Eligibility: People between 18 and 70 years can join this scheme.
- Account opening: You can open an NPS account in a bank or online.
- Contribution: You regularly deposit money in your NPS account. The minimum annual contribution is Rs 500.
- Investment: Your money is invested in equities, corporate bonds and government securities.
- Returns: You can get an average annual return of 10-12%, although it is not guaranteed.
- Withdrawal: At the age of 60, you can withdraw 60% of your funds as a lump sum. The remaining 40% will give you pension.
Benefits of NPS:
- Potential for higher returns: Market-based investments can lead to better returns.
- Tax benefits: Investments in NPS are tax-exempt under Section 80C and 80CCD of the Income Tax Act.
- Flexible investments: You can choose your mode of investment.
- Low expenses: Management charges in NPS are very low, which enhances your returns.
Post Office Monthly Income Scheme:
The Post Office Monthly Income Scheme (POMIS) is a savings scheme run by the Indian Postal Department. It is ideal for those who want regular income with low risk.
How does POMIS work?
Investment: You deposit a fixed amount. The maximum investment is capped at Rs 9 lakh for an individual account and Rs 15 lakh for a joint account.
- Tenure: The scheme is for 5 years, which can be extended for another 5 years.
- Interest rate: Currently the interest rate is 7.1% per annum (which may change from time to time).
- Income: You get income in the form of interest every month.
- Maturity: After 5 years you can withdraw your original investment.
Advantages of POMIS
- Safe investment: Your money is completely safe with government guarantee
- Regular income: Fixed income is received every month, which helps in meeting your expenses.
- Easy investment: Account can be easily opened in any post office.
- Tax benefits: TDS is not levied on income from POMIS, but it comes under the purview of income tax.
Retirement planning is an important financial decision. Schemes like Atal Pension Yojana, National Pension System and Post Office Monthly Income Scheme provide you with various options. You should choose the right plan based on your income, risk appetite and future needs.
Remember, the sooner you start planning for retirement, it will be beneficial for you.. Speak to your financial advisor and start planning for your secure future today.
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