Best Retirement Plans in India to Invest in 2024

8 Mins

Retirement plans help you in being financially independent post your retirement. Once you retire the fixed and regular flow of money stops. Without any savings and investments it will be difficult to manage your necessities and lifestyle. Moreover, with the increasing inflation and decreasing interest rates in the country it is imperative that you start planning your future. You can build your retirement corpus by understanding your needs post retirement, investment preferences, and understanding risk of investment plans.

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What are Retirement Plans?

Retirement plans are a type of annuity plan to match your post-retirement needs, such as medical and living expenditures. These plans can help you prepare for your spending and guarantee your future so you can enjoy your elderly years with financial independence.

Such retirement plans help you in creating long-term corpus for financially independent future post-retirement. With retirement plans, the investor must contribute towards the plan periodically or lumpsum. You can claim the accumulated corpus either periodically or lump sum post-retirement.

Best Retirement Plans For Investment in India

Retirement Plans	Interest Rates
Mutual Funds	10% to 12% market-linked
Public Provident Fund (PPF)	7.10%
National Savings Certificate (NSC)	6.80%
Senior Citizen Savings Scheme (SCSS)	7.40%
Pradhan Mantri Vaya Vandana Yojana (PMVVY)	8%
National Pension System (NPS)	8-10%, market-linked

Best Retirement Mutual Funds

One of the most significant aspects of wealth building is return on investment. Retirement mutual funds allow you to gain exposure to a variety of asset classes and subclasses, perhaps resulting in higher returns.
Equity has been the highest performing asset class in the long run, according to historical statistics, and has the ability to build wealth for investors over a long investment horizon.
SIP allows you to invest in a mutual fund scheme of your choice from your regular monthly savings by auto-debit from your savings bank account, based on your investment needs and risk appetite.
SIPs can be a disciplined form of investing because they force you to keep track of your spending and invest on a regular basis.
By taking advantage of stock market volatility, SIPs in equity mutual fund schemes also average the cost of your purchase (Rupee Cost Averaging)

Atal Pension Yojana (APY)

Atal Pension Yojana is a Government of India initiative for the unorganised sector to include them under the social security scheme.
Under this pension scheme, the subscribers would receive fixed amounts of pensions of INR 1,000, INR 2,000, INR 3,000, INR 4,000, and INR 5,000 per month. Pension will be received at the age of 60 years based on the contributions they made.
Investors can start investing in the scheme at the age of 18, and the maximum age to join is 40 years. They can contribute only up to the age of 40.
If an investor discontinues paying, after six months, the account will be frozen. After 12 months, the account will be deactivated, and after 24 months, the account will be closed.
The contribution towards the APY scheme is eligible for tax benefits up to INR 1.5 lakhs under section 80CCD (1) and an additional INR 50,000 under Section 80CCD(1B).
Therefore, though the scheme was launched for the unorganised sector, anyone can invest in this and generate income during retirement.
Hence, investors looking for additional retirement income can invest in APY.

Public Provident Fund (PPF)

The Public Provident Fund is one of the post office savings schemes. PPF is one of the popular retirement plans.
The lock-in period is 15 years for a PPF. One can extend their investment in PPF for another five years.
PPF contributions are eligible for a tax deduction. You can claim a tax deduction under Section 80C of the Income Tax Act up to Rs 1.5 lakhs. Most importantly, returns from PPF are completely tax exempt as well.
The minimum investment into a PPF account is INR 500, and the maximum investment is INR 1,50,000.
Investors cannot open multiple accounts.
The interest is compounded annually.
As PPF has a lock-in period of 15 years. Hence, investing early in PPF will help in a stress-free retirement.

National Savings Certificate (NSC)

National Savings Certificate is a government-backed fixed income scheme. You can open an NSC account at any post office.
The scheme guarantees return in the form of interest. The current interest rate of 6.8%, as of 1st November 2024. The interest earned is reinvested back into the scheme.
NSC schemes come with a lock in period of 5 years.
The minimum deposit is INR 100, and there is no maximum limit for investment in NSC.
There is no tax deduction at source for NSC investments.
NSC investments and reinvested interest up to INR 1.5 lakhs are tax exempted under Section 80C of the Income Tax Act.
Investors have to pay a tax on the maturity amount as per their tax slab.

Pradhan Mantri Vaya Vandana Yojana (PMVVY)

PMVVY is a retirement and pension scheme for senior citizens.
Life Insurance Corporation (LIC) manages and operates the scheme under the purview of the Government.
The scheme guarantees returns as the Government of India backs it. PMVVY provides its subscribers an assured return of 7.40% for ten years.
The scheme pays out a regular pension with a monthly, quarterly, or yearly frequency.
The minimum purchase price is INR 1.5 lakhs, which guarantees a monthly pension of INR 1,000.
The maximum purchase price is INR 15 lakhs, which guarantees a monthly pension of INR 10,000. The entire amount, including the final pension and purchase price, will be paid out at the end of 10 years.
Investment in PMVVY is not eligible for tax deduction under Section 80C of the Income Tax Act. The returns from the scheme are taxable at the individual tax slab.

Note: The last date to invest in PMVVY is 31st March 2023. From April 1st 2023, the PM Vaya Vandana Yojana is set to close.

Senior Citizens Savings Scheme (SCSS)

Senior Citizens Savings Scheme is a post office savings scheme for senior citizens that provides investors with security and a predictable income.
It’s also a tax-saving strategy. It’s ideal for retirees who are seeking a low-risk investment.
Since risk in SCSS is comparatively low, investors who understand and can absorb this can invest in it.
Investors who prefer stable returns and regular income can also invest in the Senior Citizens Savings Scheme.
SCSS has a five-year lock-in period.
At the end of each quarter, SCSS interest rates are paid out. The current rate of interest is 7.4%. (Oct-Dec 2021). On the first working day of January, April, July, and October, the collected interest is paid.
The deposits must be in multiples of 1,000 rupees. In addition, the SCSS account has a maximum limit of INR 15,00,000.

National Pension Scheme (NPS)

NPS Scheme is a government-regulated, low-cost retirement plan.
You can claim tax deduction under section 80C and section 80CCD(1) up to Rs 2 lakh
Subscribers can create their own portfolios or select a fund manager.
You can take a portion of your money out when you retire and use the rest to buy an annuity, which will provide you with a regular income.

Why Retirement Planning is Important?

Inflation

Inflation is the loss of money’s purchasing power over time. If inflation is 5%, after a year, Rs 100 will only buy Rs 95 worth of items. Your necessities will remain the same, but the value of your money will decrease. It is critical that your money grows over time in order to combat inflation. You must account for inflation while making any investment decision.

Decreasing Interest Rates

For their regular financial flow, senior persons have traditionally relied on bank fixed deposits and government small savings programmes. Interest rates on government small savings accounts have witnessed a dramatic decrease in the past few financial years. To earn enough income to meet your post-retirement needs, you’ll need to save more and build a larger corpus.

Pension Post Retirement

India is predominantly a non-pensioned society. The private sector employees in India do not have access to a national pension plan. They must save and invest systematically during their working years in order to generate their own post-retirement income stream.

How To Invest in Scripbox’s Retirement Plan?

Scripbox’s Retire Confident Plan

Scripbox Retire Confident is a goal-based investment plan that will help you start monthly SIPs for your post-retirement financial needs.

You can customize to suit your needs after factoring in your current income, expenses, savings, planned retirement age, etc. Market indicators, such as, rate of inflation, are also factored in to decide the investment needed for you to lead a stress-free retired life.

You can follow the following steps to invest in Scripbox’s Retire Confident Plan: