As per section 80CCC of the Income Tax act, the premiums paid out for the pension plan are subjected to a deduction of up to a maximum of Rs 10,000 on taxable income.

1. Deferred annuity plans: You pay a fixed amount as premium and get your money back in regular installments every month. If you have taxable income, it is given to you after tax deductions.

2. Immediate annuity plans: Here you can invest a lump sum amount of money and get a fixed amount of money for a fixed amount of time as long as you live. There are different types of plans that insurance companies offer:

• a. Guaranteed period annuity: fixed amount + fixed duration Here time is fixed irrespective of the fact that the person survives or not. For example, if someone decides to buy this plan for 20 years, s/he will get a certain amount of money for next 20 years. However, if the policy holder expires after 10 years, the money will be given to the nominee for the next 10 years.
• b. Annuity certain: fixed amount + survival benefits Policy holder will get a fixed amount of money for a fixed duration – here if s/he expires, nominee will get the pension for the remaining years. However, if the policy holder survives, s/he will get the pension as long as s/he lives.
• c. Life Annuity: fixed amount + Extra benefits Pension as long as policy holder lives. If the person dies, then the nominee will get the purchase price of the annuity. Purchase price = assured amount to be received on maturity + bonus

1. How much is required? You pay a fixed amount as premium and get your money back in regular installments every month. If you have taxable income, it is given to you after tax deductions.

2. Know what suits you. Here you can invest a lump sum amount of money and get a fixed amount of money for a fixed amount of time as long as you live. There are different types of plans that insurance companies offer:

• Right Plan: choose a plan that can effectively deal with inflation and yield returns that would be sufficient to meet your needs after retirement. Also, the plan you buy should complement your existing retirement savings.
• Pension guarantee: The perfect retirement plan is the one that also takes care ofyour dependents’ needs in your absence.
• Flexibility of Premium payment: The ability to pay higher premium will also increase, as you will advance in your career.
• Additional Benefits: Bonus and benefits. Benefits, such as completion of payment premiums, help in maintaining your future goals even in your absence by self-funding of premiums in case of an untimely death of the policyholder; while the additional benefits, such as loyalty bonus, fetch you a larger amount on your retirement.

3. Know how much you need to save regularly. How much you can save, depends on how much you are earning today and how much your family expenses are. Reduction in extra expenses, even the smaller once, can provide you and your loved ones, a comfortable life tomorrow.

4. Select the right retirement plan. Remember, extra benefits come with extra premium. While deciding, do consider these points: Child age (will s/he be mature enough by the time policy expirs), nuclear or joint family, rented or own house, number of dependents, dreams to be fulfilled after retirement (hobbies etc), nature of business or expected increase in future salary etc.

5. Start saving now. Longer the duration, smaller will be the installments. Enjoy the power of compounding.

6. Systematically invest a fixed amount.