Everyone wants to retire in a position where they are assured of financial security and peace of mind. This is very much possible if they have planned ahead for retirement by 20-30 years in their working life. One of the ways to plan for retirement is with a unit-linked pension plan.
How unit-linked pension plans work?
Pension ULIPs are different from traditional pension plans in terms of investments.
While ULIPs invest in equity markets among other investments, traditional pension plans invest mainly in bond and government securities (gsecs or gilts) markets.
Expectedly returns of traditional pension plans are stable and therefore more suitable for risk adverse investors.
Unit-linked pension scheme is ideal for risk-taking investors given the volatility of equities.
Having said that, since equities outperform other asset classes like bonds over the long-term, the investor stands a better chance of accumulating a larger corpus over the long-term by investing in a pension ULIP.
In terms of tax benefits however, there is no difference between the two plans. Premiums paid towards the plans are eligible for tax exemption under the broader Section 80C upto a maximum of Rs 1,50,000 annually.
Curated from Unit Linked Pension & Retirement Plans