Retirement savings are great, but when it comes to daily expenses, a pension is what really keeps you going. If you receive a monthly pension, you won’t have to rely on anyone for those little things. There are plenty of schemes out there that can help you set up a pension for your golden years. Here are five options to consider.
EPS
If you’re working in the private sector, you’re likely contributing to the EPFO every month. Both you and your employer chip in, with part of that going into your retirement fund and the rest into the Employee Pension Scheme (EPS). Once you’ve contributed to EPS for at least 10 years, you can start receiving a monthly pension when you retire. The amount you get depends on how much you’ve contributed over the years.
Atal Pension Yojana
The Atal Pension Yojana is a great way to secure a steady income during retirement, especially for those who don’t pay taxes. To join, you need to be between 18 and 40 years old. You’ll make small monthly contributions until you hit 60. After that, you can receive a monthly pension ranging from Rs 1000 to Rs 5000, depending on how much you contributed and the pension amount you want.
NPS
No matter if you work for the government or in the private sector, the National Pension System (NPS) is a solid choice for securing a monthly pension. This scheme not only helps you save for retirement but also offers a pension. Since it’s linked to the market, the returns can vary, but over time, it tends to perform well, averaging around 10 percent. Anyone aged 18 to 75 can enroll. When you retire, you’ll get 60% of your savings as a lump sum and the remaining 40% will be used to provide your pension. The more you invest in the annuity, the higher your pension will be.
SWP
If you’re looking to secure a solid pension for your retirement, consider going with a Systematic Withdrawal Plan (SWP). This investment option allows you to receive a set amount each month from your mutual fund. It’s a great way to ensure a steady income in your later years. Just remember, you’ll need to build up a decent fund first, either through a Systematic Investment Plan (SIP) or another investment strategy while you’re still working. Once you retire, you can kick off the SWP.
With SWP, you’ll be cashing out mutual fund units to get your monthly payouts. Keep in mind that once the fund runs out, the withdrawals will stop. You’ll need to decide how often you want to receive your money—monthly, quarterly, or annually. If you didn’t manage to set up an SIP, you can still use the retirement funds you have to start this plan.
POMIS
Now, let’s talk about the Post Office Monthly Income Scheme (POMIS). This is a government-backed scheme that lets you earn a monthly income through interest. You can open either a single or joint account, with a maximum deposit of 9 lakh in a single account and 15 lakh in a joint one. The money is locked in for up to 5 years.
With the current interest rate of 7.4%, you could make around 9,250 rupees each month from a joint account. After 5 years, you’ll get your initial deposit back. If you want to keep benefiting from the scheme after that, just open a new account!