Every year, the pre-Budget phase is flooded with anticipation and hopes from different segments of the economy. Individuals who rely on a regular income look forward to the introduction of new benefits, exemptions or deductions that will help ease the tax burden. This year, however, since the Lok Sabha elections are just round the corner, the Interim budget 2024 has nothing much in store. Nevertheless, the announcements by Finance Minister Nirmala Sitharaman have predicted a stable economy for the coming year, much to the relief of investors and taxpayers alike. If you are looking to invest in a pension plan to secure your retirement years, there’s good news for you too!
Close to the elections, the vote-on-account budget has focused on stability and long-term growth. In her announcement, the Finance Minister set the fiscal deficit target at 5.1% and net borrowing at Rs 11.75 lakh crore for FY 2024-25. This has paved the way for a stable economy for the year with a positive bond market outlook. Bond yields are expected to be lower and their prices higher, which indicates long-term bonds will do well in the market in 2024. In addition, with a capital expenditure growth target of 12%, the fixed-income market is also expected to be in good shape.
How can this impact your retirement plans?
Although many of us postpone planning for retirement, the truth is that a smooth retirement necessitates building a solid corpus over the years. For that, all you need is a well-strategized financial planning that would help in selecting the right investment path. To have a financially secure retirement, it’s crucial to ensure a regular income flow that would take care of your costs of living when salaries are no longer flowing in. This can be ensured by investing in a pension or annuity plan, that requires you to pay premiums in your work-life and enjoy not just a lump sum at maturity but also a monthly income stream after you retire.
These plans invest the premiums you pay regularly to fetch returns from a portfolio of equities, bonds or fixed-income assets, building the retirement corpus in course of time. It’s therefore crucial to keep your capital protected and earn assured returns from your investments. This can happen when you keep a good chunk of money in bonds and fixed-income assets and both the markets have a positive story to tell. With the interim budget hinting at a good performance of long-term bonds and a stable fixed-income market, a pension plan investing in these instruments will likely fetch you the best of returns and help in building a stronger corpus.
With ample options available in the market, the trick here is to choose the pension plan that brings you the best benefits in terms of optimized returns. For instance, in HDFC Life’s Smart Pension Plus plan, the annuity income is guaranteed for your entire life and one plan caters to both single and joint life cover. In addition, this traditional non-linked, non-participating plan allows you to get the annuity with immediate or deferred payouts.
There’s more good news in store for the pension plan holders. The interim budget has extended the tax benefits of pension or annuity plans till 31 March 2025, which indeed is a major plus. To sum it up, if you are planning to invest in a pension plan, this indeed is a good time to do so.
