What is a Retirement plan?

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What is a Retirement plan?
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• Pension plans or retirement plans are offered by
  Life Insurance Companies to help individuals
  build a retirement corpus. On maturity this
  corpus is invested in an Immediate Annuity Plan
  for generating a regular income stream, which is
  referred to as annuity payout.

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• Typically, retirement plans have two phases
• Accumulation phase The premiums paid
  by the policyholder accumulate through the tenure
  of the plan. The policyholder has the option to
  choose Traditional or Unit Linked Pension Plan
  based on their risk taking capacity. On vesting,
  the policyholder has the option to invest the
  entire proceedings in Immediate Annuity Plan from
  the same Life Insurer or commute 1/3rd of the
  accumulated corpus as a lump sum amount and
  invest the remaining in Immediate Annuity.

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• Annuity phase This follows the
  accumulation stage, wherein the policyholder
  starts getting payouts from the accumulated
  corpus. The age for the start of the payouts is
  decided by the policyholder and is called the
  vesting age. In most plans it is usually between
  30to 70 years. In the immediate annuity option, a
  person can pay in lump-sum, instead of over the
  years, and start getting income immediately.

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• A combination of pension and
  annuity plans offered by life insurance companies
  is a good investment avenue for a secure
  retirement. Pension plans help build a retirement
  corpus. These plans also have assured benefit on
  death of the insured. The unique feature that
  distinguishes it from any other Retirement Plan
  Company is that on maturity, two third of the
  corpus is mandated by current regulation to be
  reinvested for generating a regular income
  stream, which is referred to as Annuity. The
  remaining one third can be taken as tax free lump
  sum. An Annuity is an insurance product that pays
  out income and is a popular choice for investors
  who want to receive a steady income stream post
  retirement.

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