What are retirement and pension plans?
Both pension plans and retirement plans are a category of life insurance plans that are specially designed to meet your post-retirement needs. To ensure that you can enjoy your golden years with financial independence, these plans help cover your expenses and secure your future.
How do pension plans work?
Upon retiring, your regular income flow dries up and meeting day to day expenses can become a problem. A best pension plan ensures that your income flow continues well beyond your retirement. Pension plans let you accumulate a corpus of funds through a lump sum investment or premiums that you pay over a period of time. Upon retirement, you receive regular payments from your corpus to ensure that the expenses can be met and your future is secure.
Why do I need to plan for my retirement?
With average life expectancy increasing in India, it has become increasingly important to plan for a longer retirement. The life expectancy figures indicate how long an average individual lives. In India, the average life expectancy of a person aged 60 is 18.022 years. This means that an average Indian lives up to the age of 78. Hence, you need to start planning in advance to maintain your lifestyle and take care of other expenses for such a long duration.
A major worry with increasing age is unforeseen medical expenses. Rising medical costs can be difficult to manage unless you plan for them in advance.
You would like to live your life on your own terms after your retirement. However, more than 65%^^ individuals above the age of 60 depend on others for their daily expenses. This shows how important it is to plan for your retirement and ensure your financial independence.
^^As per the 'Situation Analysis of The Elderly in India' report of Ministry of Statistics and Programme Implementation MOSPI
GUARANTEED REGULAR INCOME FOR LIFE
With Retirement plans, you and your spouse can receive regular pension for life.
SECURITY FOR YOUR CHILDREN IN YOUR ABSENCE
In some retirement plans, your children will receive a lump-sum amount in the absence of both you and your spouse. This helps you leave behind a legacy for your children.
TAX BENEFITS U/S 123 (Read with Schedule XV) AND Section 11 (Read with schedule II to VII)
Apart from enjoying a comfortable retirement, you can also enjoy tax benefits** on the premium paid up to a limit of ₹1.5 lakh.
**Tax benefits are subject to conditions under 123 (Read with Schedule XV) and Section 11 (Read with schedule II to VII) and other provisions of the Income Tax Act, 2025. Applicable taxes will be charged extra as per prevailing rates. Tax laws are subject to amendments from time to time.
4 ways to pass on your retirement plan money to your family
ENTER CORRECT NOMINEE DETAILS
Provide correct nominee details to ensure your nominee receives the money, in case of your demise during the policy term. Ideally, make your spouse or child the nominee.
INFORM YOUR NOMINEE ABOUT THE POLICY
Ensure your nominee is aware about your plan and share key policy details. (e.g. Policy Number), so that he/she can get the claim amount without hassle.
BUY THE RIGHT ANNUITY PLAN TO SECURE YOUR SPOUSE
For e.g. you can secure your spouse's future by opting for a joint life annuity plan. Regular income will be provided to your spouse after your demise.
BUY AN ANNUITY PLAN THAT CAN HELP YOUR CHILDREN
For e.g. you can buy an annuity with return of purchase price. You will receive regular income as long as you live. After you, your children will get back the initial lump sum paid by you.
Retirement plans offered by ICICI Prudential Life
Market linked pension plan
Guaranteed Annuity plan
ICICI Pru
Signature Pension
IN ULIPS, THE INVESTMENT RISK IN THE INVESTMENT PORTFOLIO IS BORNE BY THE POLICYHOLDERU
Key Features
- Build retirement corpus
- Tax-free1 withdrawal of up to 60% of accumulated amount
- Flexibility of cash withdrawals2
- Return of charges at vesting3
1 2 3Conditions Apply
W/II/0836/2025-26
ICICI Pru
Guaranteed Pension Plan Flexi
Key Features
- A limited/regular-pay deferred annuity plan that helps you gradually build the retirement savings and provide guaranteed+ income for life
- Tax benefits++ as per prevailing tax laws
- Annuity plan can cover either single or joint life&
- Flexible premium paying terms and deferment periods`
+ ++ & `Conditions Apply
ICICI Pru
Saral Pension
Key Features
- Pay just once and get a guaranteed lifelong income
- Continue pension for spouse after you with the Joint Life1 option
- Purchase Price is returned back to your nominee2
- Option to avail a loan against your policy3
1 2 3Conditions Apply
ICICI Pru
Guaranteed Pension Plan Immediate Annuity
Key Features
- Single premium plan to get guaranteed income immediately for the rest of your life
- Annuity plan can cover either single or joint life*
- Flexible payout options to suit your need#
- Tax benefits^ on premium paid u/s 123 (read with Schedule XV, Sr. No. 5 ) of Income Tax, 2025
*^Conditions Apply
ICICI Pru
Guaranteed Pension Plan Deffered Annuity
Key Features
- Single premium plan to get guaranteed income immediately for the rest of your life
- Annuity plan can cover either single or joint life*
- Flexible payout options to suit your need#
- Tax benefits^ on premium paid u/s 123 (read with Schedule XV, Sr. No. 5 ) of Income Tax, 2025
*^Conditions Apply
Why are retirement plans important in India?
Here are some reasons why you must have a retirement plan in your portfolio if you are living in India:
Rising healthcare expenses
Healthcare costs continue to rise due to inflation, and medical expenses typically increase as you grow older. Regular medications as well as emergency treatments can burden you during retirement. A pension plan can help you prepare for these expenses. It not only covers your regular healthcare needs but also provides a financial cushion for unexpected medical emergencies.
Increasing life expectancy
Advancements in medical science have increased life expectancy. This, in turn, has changed retirement for many people. Your retirement period could now last 25 to 30 years or even longer, depending on when you retire. A longer retirement requires a bigger financial corpus. Having a structured retirement plan allows you to systematically build savings that can cover your expenses later in life.
Growing cost of living
The cost of living rises over time due to inflation. As prices increase, your purchasing power decreases. This makes it essential to account for inflation while planning for retirement. Retirement plans that aim to generate inflation-beating returns can preserve your purchasing power during your retirement years.
Tax-saving benefits
Pension plans in India offer tax benefits. Depending on the type of plan, you may be eligible to claim deductions on your annual contributions, which helps reduce your taxable income and maximise overall savings. Some retirement plans also offer tax advantages on maturity or annuity payouts.
Lack of social security
Government-backed retirement benefits in India are limited and may not be sufficient to meet all post-retirement expenses. In India, individuals largely need to plan their own retirement income. Personal retirement planning helps ensure a steady and reliable income stream after retirement.
Why you should consider retirement planning now?
Here are some reasons to consider retirement planning now:
Indian economic growth story
The current rapid growth of Indian economy provides great opportunities to grow your wealth. As per your risk appetite there are many investment options available for you right now. India’s stable and growing economy should support you to build sufficient retirement corpus.
Technological advancements
With the advancements in financial technology, spur in financial advisors and emergence of artificial intelligence, wealth management has become easy. You can leverage these resources to plan your investments and build corpus for your retirement.
How much do I need to save for retirement?
When you retire, your regular income stops. However, even during retirement, you would want to maintain your existing lifestyle and be able to support your family. In addition, there could be increased medical expenses. Hence, it is important to calculate your financial requirements for retirement so that you can be prepared well in advance. It is difficult to determine the exact amount you will require post-retirement, however, below are a few factors that you can consider to arrive at the amount:
- Your day-to-day expenses – This will give you an understanding of how much amount you would need to maintain your current lifestyle even post retirement
- Events and milestones during retirement – There could be financial responsibilities even during retirement, such as paying for children’s higher education or wedding, and more. It is important to include these costs while planning for retirement
- Your post-retirement dreams – You may have dreams that you would want to fulfil post retirement, such as traveling, starting your own venture, and more. These would require a significant amount and hence, it is necessary to include these while calculating the amount you would need during your retirement
- Unforeseen costs – While planning for retirement, you should keep some amount aside for any uncertainty, such as medical expenses, or any financial emergency
- Inflation – This leads to an increase in the costs of goods and services, which requires you to pay an additional amount to consume the same goods and services at a later period. For example, if your current expenses amount to ₹ 6 lakh annually at the age of 45, to maintain the same lifestyle post retirement, you would require ₹ 14.38 lakh annually at the age of 60 assuming 6% inflation year-on-year. Hence, while calculating the amount you would need for your retirement, it is important to factor in inflation as well
How to calculate the amount I need to save for Retirement?
Here is a simple way to calculate how much you need to save for retirement:
Step-1: Calculate your annual expenses.
Step-2: Calculate the future value of your expenses: If your spending habits will remain the same then your expenses will grow on the account of inflation alone. Using an average annual inflation rate in India, you can calculate your future expenses.
Step-3: Present value of the corpus:You can calculate the expenses you would incur post your retirement using the average life expectancy of India. The total expense you would incur during your retired life would be the corpus needed before you retire. Next step is to find out the present value of the corpus.
Step-4: Amount you should save:Based on this present value, you can find out how much you should invest every month to build that corpus as per your expected rate of return
Why should I start planning for my retirement now?
at 8% inflation
Invest at 45 yrs age retirement amount will be
₹44,00,000
Invest at 45 yrs age retirement amount will be
₹74,00,000
Inflation at 7%
Power of Compounding
Power of Compounding
If you start saving early, your money will get more time to grow. For example, if you start investing ₹ 1.5 lakh p.a. at the age of 45, your retirement savings will be ₹ 44 lakh at a rate of 8% or ₹ 31 lakh at a rate of 4%, by the time you are 60 years. However, if you had started saving the same amount from the age of 40, your retirement savings at 60 would be ₹ 74 lakh at 8% interest rate and ₹ 46 lakh at 4% interest rate.
Increasing Inflation
After retirement, you will need regular income to meet your expenses. The later you start saving for your retirement, the more you will need to save. For example, if your monthly expenses are ₹ 35,000 at the age of 30, then by the age of 60, they will be ₹ 2.66 lakh## due to inflation. To meet these expenses, your retirement savings will need a monthly contribution of ₹ 27,000. However, if you delay your savings by just five years, this amount will increase to ₹ 42,500 per month. ##Assuming inflation at 7%
Calculate NowSteps to buy the best retirement plan
You want to stay financially independent even during your retirement. You want to continue your current lifestyle, meet medical expenses and meet your post-retirement goals such as buying a house, travelling, pursuing a hobby, starting a new venture, and more. Defining the goals that you want to meet during your retirement can help you plan accordingly.
Basis the goals you want to meet during your retirement, you need to calculate the amount that you will need to meet your goals. It is important to factor in inflation in this calculation. Knowing the amount that you will need will help you calculate the amount that you need to invest today to meet your retirement goals.
Look for a best retirement plan that can provide you with fixed income during your retirement. The income should be able to ensure that you achieve your post retirement goals comfortably.
This can be done online or offline. You will need to submit relevant documents like identity and address proof, income proof and others. Also, basis your retirement plan, you will need to pay your premiums monthly, half-yearly, yearly or all at once.
How do I choose a pension plan?
Why should you buy your retirement plan from ICICI prudential life?
Below are some key benefits of buying a retirement plan from ICICI Prudential Life:
Multiple options:
ICICI Prudential Life offers a variety of retirement plans to choose from for every individual, irrespective of age, income or goals
Guaranteed$$ income:
ICICI Prudential Life offers you retirement plans that provide guaranteed$$ regular income after your retirement. This helps you stay financially independent even after your retirement
$$T&Cs Apply
Simplified purchase process:
You can purchase a retirement plan from the convenience of your home or office in just a few steps. The features and benefits of all plans are available online. You can compare multiple plans, check the premium, and make an unbiased decision
What are the different types of pension plans in india?
Immediate Annuity
You may opt for this option in case you are nearing your retirement.
Deferred Annuity
You may opt for this option in case you have a few years ahead of you before your retirement.
National Pension Scheme
You may opt for this scheme if you are early on in your career and have a long time ahead for your retirement.
Public Provident Fund (PPF)
You may opt for a PPF if you prefer a government-backed, low-risk investment option with assured returns in retirement.
Atal Pension Yojana
You may opt for this option if you are between the ages of 18 and 40 years and want to receive a fixed minimum pension after you turn 60.
Employee Provident Fund
(EPF)
You may choose to invest in an EPF if your employer offers it and you prefer a structured, low-risk retirement saving option where both you and the employer jointly contribute.
ULIPs
You can consider ULIPs if you want to build wealth by investing in the equity markets and have life insurance in a single plan.
Pension Funds
You may want to consider these options if you are looking to build a retirement fund that provides a steady income in your golden years.
COMP/DOC/Dec/2021/2012/7105
COMP/DOC/Jun/2025/136/0482
COMP/DOC/Oct/2025/1010/1322
What are the benefits of retirement pension plans?
Regular Income Post Retirement
You receive a guaranteed amount of money on a regular basis after you have retired from work.
No-Risk Investment
Pension plans provide you with unconditional protection from any and all investment risks.
Insurance Cover
Most pension plans have an included insurance cover that protects you and your family from any possible financial burdens.
Option to Add Riders
You can enhance your pension plan by adding certain riders like ‘disability due to accident’ or ‘critical illness’.
Tax Benefits
Depending on the policy chosen by you, there are certain tax benefits and exemptions that you can avail of**.
More information about pension plans
Who should invest in a retirement plan?
The following people can invest in a retirement plan:
Young professionals
Even though young professionals have many years left before retirement, investing in a retirement plan at a young age allows you to begin with smaller contributions and gradually build a substantial corpus over time. Early investing also helps you benefit from the power of compounding, beat inflation and cover both essential and non-essential expenses in retirement.
You should start retirement planning if you:
- Are in your 20s or 30s
- Have recently started your career
- Want to benefit from long-term compounding
- Prefer building wealth gradually with smaller contributions
- Want to stay ahead of inflation
Self-employed individuals
Self-employed individuals do not have access to employer-provided pension plans. They are solely responsible for planning their retirement. And since their income may not always be steady, retirement planning becomes even more important. Investing in a suitable pension plan can help them create financial stability. It also ensures they can meet their future needs independently.
You should start retirement planning if you:
- Run your own business
- Are a freelancer
- Do not receive employer-sponsored pension benefits
- Want to create long-term financial stability
Mid-career professionals
Individuals in the middle of their careers are closer to retirement and may need to speed up their savings. With fewer working years ahead of them, it becomes essential to prioritise retirement planning. These professionals can allocate their savings toward a structured pension plan, which can help build a sufficient retirement corpus.
You should start retirement planning if you:
- Are in your late 30s or 40s
- Have increasing financial responsibilities
- Realise retirement is not too far away
- Are looking to build a corpus
Pre-retirees
Pre-retirees should focus on protecting their retirement savings. At this stage, they can use a pension plan to safeguard their savings and plan for a steady income stream post-retirement. A retirement plan can help preserve capital while ensuring a regular income during retirement years.
You should start retirement planning if you:
- Are within 5 to 10 years of retirement
- Want to protect your savings
- Prefer stable retirement income
Women
Women should strongly consider investing in retirement plans, as they generally have a longer life expectancy. Additionally, women may take career breaks, which may result in fewer savings or limited access to employer-sponsored pensions. A dedicated retirement plan helps ensure financial independence and long-term security.
You should start retirement planning if you:
- Expect a longer retirement period
- Have taken or plan to take career breaks
- Have limited access to employer pension schemes
- Want to ensure long-term financial independence
When is the right time to invest in a pension plan?
You can invest in pension plans any time as per your requirements and convenience. However, the sooner you invest, the better it is. You will have more time to contribute to your retirement savings and allow your money to grow. Also, if you invest early, you can contribute lower amounts over time as compared to when you are older. This way, you will be able to invest a large amount for your retirement over time without impacting your current budget.
COMP/DOC/Dec/2021/2712/7142
Eligibility criteria for pension plans
Minimum and Maximum Entry Age
For most pension plans, the minimum age of entry is generally 18 while the maximum entry age is 70.
Annual Premium Amount
There is no maximum limit, and the minimum annual premium amount is close to ₹ 50,000/- in most cases.
Minimum and Maximum Vesting Age
The minimum vesting age is 30 years while the maximum age is 80 years.
Premium Payment Term
Generally, the premium has to be paid for the same period as that of the chosen policy term.
Policy Term
Depending on the chosen pension plans the policy term generally ranges from 10 years to 30 years.
Documents required to buy a pension plan in india
AGE PROOF
Birth Certificate / Passport / Driving License / Voter ID Card / High School Certificate
IDENTITY PROOF
Aadhaar Card / Passport / Driving License / Voter ID Card / PAN Card
ADDRESS PROOF
Aadhaar Card / Passport / Driving License / Ration Card / Electricity Bill / Telephone Bill
INCOME PROOF
Bank Statement Slip / Salary Slip / Income Tax Return File
MEDICAL REPORTS
Some insurance providers may ask for medical reports before you can buy a pension plan from them
Frequently Asked Questions - Retirement Pension Plans
A pension is a fund into which a sum of money can be added during your employment years and you can draw periodic payments from this fund once you have retired. This way, a pension continues to provide an income to support you even after your retirement.
Your pension is calculated on the basis of your gender, savings accumulated, age at which the pension starts and mode of annuity.
Yes, you can purchase more than one pension plan for yourself. There is no restriction on the number of pension plans that you can purchase. However, you can claim deduction against the premiums paid towards the plans only upto ₹ 1.5 lakh per annum under Section 80CCC* of the Income Tax Act, 1961.
Yes, you can change the nominee of the retirement policy anytime during your life.
Yes, you can surrender your retirement plan and get the surrender value. The amount is decided basis the duration for which you were invested in the plan. This amount is commonly referred to as surrender value.
Savings and retirement plans are different instruments. Both help you save money for a fixed goal. A savings plan can be for used for long-term or short-term goals. On the other hand, retirement plans are meant specifically for retirement purposes.
The features, benefits and options for savings and retirement plans vary according to their purpose. For example, a savings plan will provide you the payout for a certain duration which can be used to fulfil your goals, however, a retirement annuity plan will provide you payouts for life.
Depending on the type of plan chosen, pension plans in India provide certain tax benefits. In most cases, any contributions towards a pension fund can be deducted from your gross income leading to tax savings. At the time of maturity, you can also withdraw up to 60% of your accumulated corpus without paying any tax**.
You can pay retirement plan premiums electronically using Net Banking, Credit or Debit Cards, Payment wallets, ECS linked payments and even through cheque deposits.
Yes, you can choose to receive your pension at any age and continue working. Pension/retirement plans provide you the option to choose when you want to start receiving the payout from the plan irrespective of your retirement date.
A participating plan enables the policyholder to share the profits of the insurance company in the form of bonuses or dividends. In a non-participating plan, the profits are not shared and no dividends are paid to the policyholder. Both these types of plans provide guaranteed life cover.
You can start saving for your retirement as early as you start earning. This ensures that there is no stress during the latter half of your working life. Investment for your child’s education can start from the child’s birth and can run parallel with the investment for retirement.
Financial planning for retirement involves the following steps.
- Start by setting a goal
- Calculate the amount you will need to achieve your goal. It is important to factor in inflation in this calculation
- Invest in a suitable pension plan that meets your needs
- Reduce unnecessary expenses and debt. This will help you save and invest more for your retirement
Financial planning for retirement should start as early in life as possible. Starting early offers you a longer time horizon and allows your money to grow. It also allows you to invest smaller amounts, making it easier on your pocket.
Short for Financial Independence, Retire Early, the FIREf retirement method focuses on saving and investing aggressively while living frugally to retire well before the usual retirement age. The strategy works by building a retirement fund that is worth at least 25 to 30 times your annual expenses so you can stop working full-time and live comfortably off your investments.
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