“The Indian household finance landscape is distinctive through the near total absence of pension wealth,” said the July 2017 report of the government’s Household Finance Committee[1].This means that the youngest country in the world is facing limited systematic fallback options for their future at a time when inflation and healthcare costs are expected to soar further as time passes. The formal retirement coverage in the country remains severely inadequate, with only one in ten Indians estimated to have some kind of pension benefits. Even among those who have pension coverage, most believe that it is not adequate enough to take care of their post-retirement needs. A recent report by Ernst and Young estimated that Indians save less than half of their optimum post-retirement coverage, largely due to lack of awareness, planning and financial resources.^[2]

Even the benefits of the government-backed provident funds and pension schemes are typically not enough to generate a substantial retirement income, leaving most Indians to fend-off the later years on their own. Moreover, with rising life expectancy, the number of years spent in retirement has also increased drastically. Greater longevity is a great gift to all of us, but to fully exploit it we need to structure things differently and more prudently. It has never been more important to ensure that your pension income is more than enough to maintain your current lifestyle and protect your loved ones from unexpected financial vulnerabilities.

What to do?
With little backing from the state and our employers, we need to self-sponsor our post-job finances through a mix of assets. Life insurance policies and pension policies have emerged as one of the most sought-after way of saving for your retirement due to their low-risk nature and the increased availability of flexible and customizable policies.

Life insurance policies can help you hit the sweet spot between risk and reward, and have little-to-low exposure to market volatility (traditional Non Linked insurance plans) when compared to other asset classes. One such life insurance plan is the ‘immediate annuity plan’, which aims to provide long-term financial security through a single investment. The scheme guarantees a fixed-rate pension for life after a one-time-only lump sum payment of the premium, which itself paid back to the descendants of the policyholder after their demise (subjected to the chosen options under immediate annuity plan) . The plan provides flexibility in terms of payout frequency which can be determined by the customer as per their individual requirement.

When to do?
It is necessary to understand your future requirements and start planning from an early age. Additionally, price inflation and medical inflation can create a huge unpredictability for the adequacy of retirement savings. Therefore, you must not lose any more time in planning your retirement. Modern-day life insurers give you the facility to calibrate your investment according to your needs and time-frame. Choose a deferred Annuity plan.

When you retire you will experience an inevitable reduction in income - an appropriate retirement plan can help you more than make up for this loss of income in retirement. By offering such tailor-made premium payment options, payout and maturity benefits, tax savings, and reliability, pension plans has the potential to bridge the gap between the needs and the capacity of an ageing India. 

To know more about Term Insurance,  browse the website for various Term Plans offered by PNB MetLife.

Doesn’t the thought of retirement sound blissful? No work, no deadlines, and all your hours spent doing the things you love, like travel, painting, and even napping in the afternoon! If you want your retirement to be what you have always dreamed of, start retirement planning now and save a considerable retirement corpus in time. The online Retirement Calculator can help you plan your future financial goals and ensure you achieve them within the stipulated time. 

 Sources:
¹ https://rbidocs.rbi.org.in/rdocs/PublicationReport/Pdfs/HFCRA28D0415E2144A009112DD314ECF5C07.PDF
² https://www.bajajfinservmarkets.in/blog/how-is-increased-life-expectancy-changing-retirement-trends/