Sir, I will be retiring from job in the year 2032 looking for pension policy. There are so many policies in the market I am getting confused. Can you suggest me a policy for which I can get monthly pension.
Ans: There are many options available for regular income after retirement, some of the suitable ones are-
1. SWP (Systematic Withdrawal Plan): Investors can withdraw fixed amounts at regular intervals. It is a mutual fund product. You can continue with SWP as long as there are balance units in the scheme. It has various benefits like the flexibility to choose an amount, capital appreciation, and moreover, the returns are tax-efficient and there is no TDS on gains unlike traditional investment options.
2. Insurance Cum Pension Policies: There are some good policies but it depends on the individual’s dynamics and requirements.
3. Fixed Income PSU and Private bond and non-cumulative FDs - This can prove to be a good alternative to meet the goal for regular cash flows and pre-determined period.
However, in the case of mutual funds, withdrawals through SWPs, which are considered redemptions, only gain part is liable for tax. It thus turns out to be very tax efficient over time. Additionally, it provides all the flexibility and liquidity with regular and predictable income.
The suitability of products totally depends and varies from individual to individual’s goals and requirement.