Retirement - Pension Plans in India 2025

What is a Pension Plan or Retirement Plan?

A pension plan is a dedicated savings vehicle, designed to build a reliable income stream for your post-retirement life. It's an investment that grows through consistent contributions, ensuring financial stability in your later years. Starting early with a well-chosen pension plan allows you to build a substantial retirement fund.

Pension plans create retirement savings through various contribution methods. Some plans involve shared contributions between employer and employee, while others rely on individual deposits. At retirement, these funds can usually be converted into an annuity, providing regular income.

Therefore, it's important to research and select the most suitable pension plan to meet your individual needs.

Following are the details of the best pension plans by insurance companies:

Types of Pension Plans in India

A wide range of pension plans in India are available to meet various financial needs. These plans have multiple classifications based on the plan structure and benefits.

Let's explore these pension plans in detail:

Financial News

India set for $50 billion consumption and savings boost: UBS

MUMBAI: India is set for a $50 billion consumption and savings boost as the next decadal wage revision for central govt employees and pensioners, due in Jan 2026, will trigger salary hikes for state govt employees and public sector undertakings.

According to a report by UBS, the 8th central pay commission pay hike will shape India’s economic trajectory from 2026-28, with around 3.1 crore people — 1.8 crore govt employees and 1.3 crore pensioners — standing to benefit. UBS expects the hike to boost savings more than consumption, while keeping India’s fiscal position stable, with govt focused on macro stability and investment-led growth.

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India set for $50 billion consumption and savings boost: UBS

MUMBAI: India is set for a $50 billion consumption and savings boost as the next decadal wage revision for central govt employees and pensioners, due in Jan 2026, will trigger salary hikes for state govt employees and public sector undertakings.

According to a report by UBS, the 8th central pay commission pay hike will shape India’s economic trajectory from 2026-28, with around 3.1 crore people — 1.8 crore govt employees and 1.3 crore pensioners — standing to benefit. UBS expects the hike to boost savings more than consumption, while keeping India’s fiscal position stable, with govt focused on macro stability and investment-led growth.

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Impact of ₹1 lakh crore tax relief will be visible from April: Economic affairs secretary

The ₹1-lakh crore tax relief, announced in the Union Budget on February 1, is expected to have an immediate impact on consumption from April 1, according to Economic Affairs Secretary Ajay Seth.

Speaking at a town hall organised by CNBC-TV18, Seth said, 'Other measures in the budget, whether it is on a capex or on reforms or several schemes will always have a lag. But as far as consumption is concerned, the big tax relief, which is 0.3% of the GDP, (we will) get to know that from first April onwards, that is an extra money in their pocket.'

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RBI's Liquidity Boost Benefits Banks & NBFCs

The Reserve Bank of India's (RBI) recent liquidity infusion is set to benefit banks and NBFCs like HDFC Bank, Axis Bank, and LIC Housing Finance. This move aims to enhance credit availability, ease funding constraints, and support economic growth.

With improved liquidity, these institutions can extend loans more efficiently, boosting sectors like housing and small businesses. Analysts believe this step will stabilize interest rates and improve market conditions. Additionally, it enhances investor confidence, ensuring financial stability and promoting economic resilience. Experts will monitor its long-term effects on growth.

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How Does a Pension Plan Work?

Eligibility Criteria to Buy Pension Plan for Retirement

The three main eligibility criteria for purchasing retirement plans in India are really important because they help ensure you're on track for long-term financial security:

1. Entry Age:

   In major cases, the minimum entry age for a Pension Plan is 18 years, but some plans require an entry age of 30 years. The maximum entry age is usually around 75 years.

2. Premium:

   Policyholders must pay a minimum premium for their Pension Plan, as the pension amount is based on the premium paid.

3. Vesting Age:

   The age at which a policyholder begins receiving their pension is known as the vesting age, which is usually set at 40 years but can vary depending on the insurance provider.

Advantages of Retirement Pension Plans

Understanding the key benefits of a retirement or pension plan is essential, as these advantages help ensure financial stability, regular income, and a stress-free life after retirement:

1. Sum Assured:

   The sum assured is a definite amount offered to the nominee of the plan at the end of the pension plan tenure. It is generally 10X the annual premium or the fund value of the policy.

2. Tax Benefits:

   Premiums paid qualify for tax deductions under Section 80C, and maturity proceeds can avail of tax exemption under Section 10(10D) of the Income Tax Act, 1961. For Pension plans without risk coverage, the customer gets tax-free maturity under section 10(10A) and Section 26AB.

3. Annuity:

   An annuity is the fixed amount you will receive each year throughout your life tenure on the purchase of an annuity plan. The annuity can be immediate or deferred, depending upon the nature.

4. Surrender Value:

   The surrender value of a pension plan is the amount the insurance company will pay you if you surrender the plan before its maturity.

5. Flexibility:

   Pension plans provide various options for premium payment (lump sum or periodic) and annuity payouts (monthly, quarterly, or annually).

6. Risk Coverage:

   Retirement plans may or may not include life insurance coverage based on the choice of the customer. In case the customer opts in for risk cover, it provides financial security to dependents.

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What is Retirement Planning?

Retirement planning is the process of preparing your finances for the retirement stage of your life. It involves setting goals, estimating your income needs, and taking steps to accumulate and manage funds to support those needs throughout your retirement years.

It is important to have a well-thought-out retirement plan that considers factors such as inflation, healthcare costs, and changing lifestyle needs. Start planning for retirement as early as possible to accumulate enough funds for future expenses and maintain a standard of living during retirement years. 

How to Buy a Retirement Plan Online in 2025?

To buy a retirement plan, you will want to start by finding out about your financial goals, then follow these steps:

Step 1-

You can check retirement plans on this page or through the Policybazaar homepage.

Step 2-

Check the features and premiums of different plans to find the best fit for you.

Step 3-

Pick and choose the most suitable plan that aligns with your goals and needs.

Step 4-

Think about adding on features or adjusting coverage if needed to modify the plan according to your situation.

Step 5-

Make your payment online and receive confirmation about your retirement plan.

Why Should You Buy a Pension Plan from Policybazaar?

Policybazaar offers you certain facilities that ease out your experience in purchasing a pension plan. Let us learn them below:

1. Wide Range of Options:

   You can compare multiple pension plans from top insurers on a single platform.

2. Easy Comparison:

   Policybazaar allows you to compare features, benefits, and premiums of different plans to make an informed decision.

3. Customizable Plans:

   Find plans customized to your retirement goals, budget, and financial needs.

4. Transparent Process:

   No hidden charges; all details are clearly presented before purchase.

5. Expert Assistance:

   Get guidance from financial advisors to choose the best retirement plan.

6. 24/7 Customer Support:

   Round-the-clock assistance for queries, claim processes, and policy management.

Pension Plans Vs. PPF Vs. NPS Vs. Saral Pension Yojana

Conclusion

Pension Plans play an important role in securing financial stability during retirement. With a diverse range of options, individuals can choose pension plans according to their choices to meet specific needs, ensuring a comfortable and worry-free post-retirement life. Planning ahead and selecting the right pension plan are essential steps towards a secure and fulfilling retirement journey.