PENSION, RETIREMENT AND ESTATE PLANNING

Pension: A regular payment received after retirement from a regular occupation/job or upon attaining a certain age.
Pension Plans: Provide financial security and stability during old age, ensuring people can live with pride and without compromising their standard of living.
Retirement Planning: Ensures financial security and stability during old age, allowing people to live with pride and without compromising their standard of living.

Key Features of Pension

No separate account needed: Existing accounts can be used for receiving pension.
Transferable: Pension accounts can be transferred to another branch or different bank.
Life Certificate: Must be submitted to the bank branch in November every year.
Jeevan Pramaan: Digital Life Certificate using Aadhaar and mobile at www.jeevanpramaan.gov.in.

Thumb impression: Can be used for withdrawal with two independent witnesses.
Mark on cheque/withdrawal form: Can be used if unable to put thumb impression, with two independent witnesses.
Authorized person: Can withdraw amount on behalf of the account holder, with two independent witnesses.

Aims: To institute pension reforms and inculcate the habit of saving for retirement amongst citizens.
Eligibility: Open to all citizens of India between 18-60 years.
Permanent Retirement Account Number (PRAN): A unique account number allotted to subscribers, remaining the same for their lifetime.

Tier I (Mandatory Retirement Tier): Certain portion can be withdrawn, subject to prescribed conditions.
Tier II (Voluntary Saving Account): Subscriber can withdraw savings whenever needed.
Tax Benefit: Investments in Tier I are eligible for tax benefits, while those in Tier II are not.

E (Equity): High return, high risk option, investing predominantly in equity-oriented investments.
C (Corporate Bonds): Medium return, medium risk option, investing predominantly in fixed income bearing securities.
G (Government Securities): Low return, low risk option, investing predominantly in government fixed income securities.
A (Alternative Investments): High risk, high return option, investing in alternative investment schemes.

Active Choice: Subscriber can choose the proportion of funds invested in each option, with restrictions on asset classes E and A.
Auto Choice: Subscriber's contribution is invested in a lifecycle fund, with dynamic allocation to different asset classes based on age.

Conditions: Subscriber can exit NPS upon attaining the age of 60 or superannuation, with certain conditions.

Pension Fund Regulatory and Development Authority (PFRDA): A statutory regulatory body established to promote, develop, and regulate the pension sector in India.

Key Features:
- Start early and retire with financial security.
- Plan wisely, setting aside money for medical expenditure and emergency needs.
- Track and review the plan regularly.
- Don't dip into retirement savings pre-retirement.

Definition: Planning during one's lifetime to earmark assets to beneficiaries, ensuring they can be used/claimed after one's demise with ease and without significant cost.
Constituents:
- Will: A written legal declaration of desires to distribute assets after demise.
- Nomination: A person who receives the right to have custody of the money on the death of the account holder.
- Power of Attorney: A legal document allowing another person to act on one's behalf.

Death Certificate and Legal Heir's Certificate: Required to transfer assets of the deceased to their name.
Will: If made, assets and wealth will be distributed as per the Will; otherwise, transfer will be made only to legal heirs.

Reference: Chapter 12 of the booklet for redressal of any grievance regarding the pension sector.