PensionIndia

1st Option : Public provident Fund

If you have not Invested in PPF, you are missing on a great government promoted scheme to create wealth and avail super tax benefits.
Presently, the PPF scheme is based on EEE tax benefits, which mean that when you deposit in the scheme you get tax benefit in terms of section 80C, the interest that gets accrued during period of the scheme on your investments are tax free and finally the amount at the time of withdrawal too is tax free…hence EEE ( Exempt,expempt,exempt ).
The maximum one can deposit in a PPF account is Rs.70,000/- ( seventy thousand only ) per person i.e you can deposit Rs.70,000/- in your name and another 70,000/- in your spouse’s name and both will quality for section 80 C benefit. In the times to come the government is proposing to raise this limit to 1 lac.
The rate of interest presently going on in PPF scheme is 8% per anum.
The scheme is long term i.e for 15 years and is extendable for 5 consecutive years.

2nd Option : Templeton India Pension Plan ( TIPP )

If you can take some risk you can almost double your gains compared to PPF scheme if you decide to take help of equities market.
India's first pension fund in the private sector helps you save for your retirement in a convenient and flexible manner and enjoy section 80 (c ) benefit.

TIPP invests in a mix of high quality debt instruments and equities to ensure relative stability of your investment and to deliver superior returns in comparison to traditional tax-saving instruments.
The fund has given a CAGR of 14.13 % since inspection which is a decent return on a retirement fund.
Following are the highlights of TIPP :

• Premature withdrawal after 3 years at a nominal charge on the NAV
• Choice of 2 plans - Dividend Scheme & Growth Scheme
• Convenience of investing amounts as low as Rs.500
• As per Section 80(C)(7) - pension fund and subscription to deposit scheme referred to in clause (xiiic) to (xiva) of section 88(2) of the Act shall be eligible for deduction under the corresponding provisions of Section 80(C)

3rd Option : LIC Jeevan Suraksha

Jeevan Suraksha is a deferred pension plan, which allows policyholder to make provision for regular income after the selected term or after the age of retirement.

Risk cover under LIC’s Jeevan Suraksha:

On death of the Life Assured during the term of the policy the basic premiums paid, excluding any rider premiums or extra premiums, up to the date of death accumulated with interest at such rates as decided by LIC of India will be payable to the nominee. Currently, the interest rate is 3%, 4% or 5 % if the death occurs within the first 10 years, 20 years or thereafter respectively.

Tax Benefits under Jeevan Suraksha:

Tax relief under Section 80ccc is available on premiums paid under New Jeevan Suraksha I.The premiums paid under New Jeevan Dhara I qualify for tax relief under Section 88.
At maturity the policyholder can encash upto a maximum 25% of the maturity proceeds as a tax-free lump sum. The balance should be compulsorily converted to an annuity at the rates applicable at the time of maturity of the policy. The policyholder has the choice of opting for any one of 5 annuity options.
The annuity options available under LIC’s Jeevan Suraksha pension plan are:

1. Annuity payable for remainder of life
2. Annuity payable for life with guaranteed period of 5, 10, 15 or 20 years
3. Joint life and last survivor annuity to the annuitant and his/ her spouse under which annuity payable to the spouse on death of the purchaser will be 50% of that payable to the annuitant
4. Life annuity with a return of purchase price on death of the annuitant
5. Life annuity increasing at a simple rate of 3% per annum

While going for schemes like LIC Jeevan Suraksha, investors should understand that the returns are very low say 3 to 5% which hardly covers the inflation in the economy.

Hence, we strongly recommend the 1st two schemes i.e PPF & TIIP and for insurance you may go for a large term policy where only the risk of your life is covered.

Harbinder S Mehra(Haru)