PENSION.....?

Pension plans should always be purchased with a long-term horizon. They can be divided into two phases – the accumulation phase and then the annuity phase. What is the difference? During the first phase, you are expected to keep paying premiums as stipulated. These tranches of premiums are invested in various instruments of investment approved by the Insurance Regulatory and Development Authority (IRDA) and the Securities and Exchange Board of India (SEBI). The next phase i.e. annuity phase starts after the accumulation phase. This is the age which is pre-determined in the plan. For instance, if you state vesting age in your plan as 55 years, it will start from that age only. Before that you keep paying premium for the purpose of investment. Once the vesting age begins, you start receiving regular income derived from your investment during the accumulation phase. A number of plans provide an option of withdrawing a lump-sum amount of up to 33 per cent during the annuity phase. The pension amount is thus adjusted accordingly.