• Deferred Annuity: Here the annuitant pays premiums till the policy term is over. After its term, the annuitant will start receiving the pension. No tax is levied on the amount the annuitant invests. You can make a one-time payment or make regular contributions towards the plan.

• Immediate Annuity: The annuitant has to deposit a large amount and the pension will begin immediately. The annuitant can avail of tax benefits prevailing in India.

• With & Without Cover: Pension Plan ‘With cover’ will give you a life cover, a lump sum amount is paid to your family in the event of your death. ‘Without cover’ implies you do not get any life cover. The amount built till the date of your death is paid to your dependents. A deferred annuity is with cover and immediate annuity plans are without cover.

• National Pension Scheme: This is introduced by the government. You have the option of withdrawing 60% of the amount at retirement and the rest is used to purchase an annuity. The maturity amount is not tax-free though.

With the variety of pension plans available in the market, it could be a challenge to choose the one which suits your requirement best. However, before you invest in a pension plan, there are some basic parameters you must evaluate

• Returns: The most important part of any investment is the return it provides. Chose a pension only after you have a fair idea about the returns it would provide. Always keep in mind that if returns are guaranteed, the rate of returns will be low. Choose an option that provides high returns.

• Liquidity: While most pension plans will have a lock-in period, during which you cannot withdraw the invested funds, there may be some plans available that offer a certain degree of flexibility in terms of withdrawal.

• Tax Benefits: Insurance premium payments paid towards the plan can help you save on tax. The same goes for pension plans. However, the annuity accumulated in tax-free but the annuity remains taxable in the hand of the recipient.

• Investment Mix: This factor comes into play only with regard to pension plans which are offered as part of a mutual fund. Find out the investment mix offered by the pension plan. While usually, the schemes are balanced, they may change over time. 

• Additional Benefits: Retirement plans offer are often accompanied by a string of additional benefits like life cover, riders like critical insurance, accidental etc. Find out the additional benefits which different plans offer before you make your selection.