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Pension Plans or Mutual Funds for Retirement? Consider Safety First!


A typical retirement plan consists of one or more asset classes such as EPF, small savings and FDs, NPS, pension schemes and life insurance.

In addition, several mutual fund companies also offer retirement products. Let’s look at the pros and cons of investing in a pension plan vs. a mutual fund.

Life Coverage

Some pension plans offer life cover. Along with building a retirement corpus, it also covers your dependents after you have left them. Mutual funds on the other hand do not offer any death benefits. Your nominee will only receive the current market value of the fund.

Maturity/Surrender Benefit

The accumulated amount invested in a retirement scheme is used to purchase an annuity at the time of retirement, which provides a fixed income during retirement.

On the other hand, a mutual fund is not flexible. You will have to redeem the fund and look for appropriate investment avenues. Also, while mutual funds can provide higher returns than pension schemes, they also carry greater risk.

Tax Savings

Investment in pension schemes from insurance companies gets you tax benefit of up to Rs. 1.5 lacs under Section 80CCC. Investment in NPS gets an additional exclusive tax benefit of Rs. 50,000 under Section 80CCD (1B). However, only Equity Linked Savings Schemes (ELSS) are eligible for tax benefits under Section 80C, thereby limiting your choices.

Remember, the same retirement plan isn’t fit for everyone. If you are looking for a secure and regular income post retirement, consider Max Life Forever Young Pension Plan, a retirement plan that guarantees lifetime income for you and your partner by enabling to build a large retirement corpus.

Unit Linked Insurance Products (ULIPs) are different from the traditional insurance products and are subject to the risk factors. The premium paid in the Unit Linked Life Insurance Policies is subject to investment risks associated with capital markets and the NAVs of the units may go up or down based on the performance of fund and factors influencing the capital market and the insured is responsible for his/her decisions. Max Life Insurance is only the name of the insurance company and Forever Young Pension Plan(UIN: 104L075V01)is only the name of the unit linked life insurance contract and does not in any way indicate the quality of the contract, its future prospects or returns. Please know the associated risks and the applicable charges from your Insurance agent or the Intermediary or policy document of the insurer. The various funds offered under this contract are the names of the funds and do not in any way indicate the quality of these funds, their future prospects or returns.For more details on risk factors, terms and conditions please read sales brochure carefully before concluding a sale. Past performance of the funds does not indicate the future performance of the funds. You may be entitled to certain applicable tax benefits on your premiums and policy benefits. Please note all the tax benefits are subject to tax laws prevailing at the time of payment of premium or receipt of benefits by you. Tax benefits are subject to changes in tax laws.


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