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    Posted May 19, 2014 by

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    How To Choose From The Best Pension Plans


    The retirement plans that reputable companies offer indeed are bundled products that offer the benefits of both investment and insurance. Know that a typical retirement plan has 2 phases - accumulation and vesting phases. The first phase is the time when you have to pay premiums and the money will be accumulated through the tenure of the plan. The accumulated money is actually invested in securities. Various retirement products are meant to protect the value of your principal while providing you with steady returns as well.

    The second phase, on the other hand is the age when you start getting payouts. This can actually be selected by you. Know that the vesting age for most plans is 40 to 70 years. Annuity phase is another term use for the period when the individual gets pension. During this phase, you can withdraw up to 33 percent of the accumulated amount in one go and the rest will be paid as pension.

    You must also know that in the immediate annuity option, an individual can pay in lump-sum, instead of over the years, and begin getting income right away. You can pay monthly, quarterly, half-yearly or annually.

    The best part about traditional retirement plans is that they can indeed provide life cover during the accumulation phase. Be reminded that different plans will offer such benefit in various forms. With this, it is very crucial for you to look into all the best pension plans and compare each so you would know which among them will best suit you.

    Here are some of the terms you must be aware about

    Vesting age – This is the age at which you choose to start receiving pension.
    Annuity – This is the term use to describe the regular monthly pension payable to you once you cross the vesting age.

    Accumulation period – This is the period if you pay premiums to accumulate funds for retirement.

    Sum assured – This is the amount that they nominee receives in case the insured person dies during the accumulation phase.

    Participating plans – These plans will give a share of the insurer’s income to policy holders. Remember that this share is not fixed – it will greatly depend on the financial performance of the company.

    Surrender chares – These are charges levied by insurer when you end the policy before the date of vesting.

    Knowing all these terms will help you understand the industry. If you are knowledgeable enough, you won’t be fooled so you can guarantee wise investment and success. For more info about pension plans here.

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