Amit Chandra recently retired but then required an emergency operation, straining his limited resources. His daughter realized employer pension plans are not enough and began reorganizing his investments to cover medical costs. Retirement planning is rare in India where people often rely on children for support. Amit's pension of 30,000 rupees is insufficient for living in Mumbai or medical needs not covered by insurance. His experience showed his daughter and son-in-law that employer benefit plans are inadequate for individual needs and specific retirement plans are needed. The article discusses various pension options individuals can use to better plan and save for retirement needs.

1. Plan in Advance for Secure Retirement
“At 50,” said author George Orwell, “everyone has the face he deserves”. The aging face tells
a tale— and no story does it tell more eloquently than the story of financial security. Worry
lines are almost always incumbent upon financial problems and no Mona Lisa smiles possible
under brows burdened by money worries. Thus, the retiree or the impending retiree shows his
preparedness for retirement in worry lines or smiles.
Amit Chandra (not his real name) returned home from a dinner one Saturday about six
months back when he felt a sharp twinge in his stomach. A visit to the family doctor the next
day did not result in any relief to the persisting discomfort; it led, instead to a referral to a
specialist at one of Mumbai’s best known hospitals. Just 48 hours after he was being toasted
by friends at his retirement party, Amit was arranging for funds for an emergency operation
— to stop the bleeding from an ulcer.
Sufficient health insurance cover ensured that Amit could afford the best treatment. But the
worry is about the subsequent incidental expenses — among other things, the expenses of the
special diet now needed the cost of repeated visits to doctors, and the higher electricity bills
from the demands of the increased use of the juicer, mixer, air-conditioning and geyser. His
daughter and son-in-law are anxiously re-organising Amit’s(small) investment portfolio,
hoping to ensure that Amit and his wife have enough to live on and pay for the ongoing
medical expenses. It’s becoming clear to them that they will have to help support the older
couple. The worry lines have begun to appear also on their faces, extending from the faces of
Amit and his wife, who, incidentally, suffers from asthma.
Retirement planning is rare in India, where financial dependence on children is high. Pension
plans set up by employers are considered sufficient — though, all too often, these packages
take a miserly view of inflation.
Amit was with a university for most of the 32 years of his working career; his monthly
pension is around Rs30, 000, a meagre sum for living in Mumbai, and an impossible sum for
their health-related needs, care that no health insurance plan will cover indefinitely.
Perhaps late for Amit, his experience has been a lesson for his daughter and son-in-law —
benefit plans ordained as mass products by employers are just not enough. If retirement needs
are specific to the individual, then retirement plans must be too.
There are various financial savings options to plan for ones retirement. The Pension Fund
Development and Regulatory Authority, set up in 2003, regulates three broad types of
pension schemes — the government pension schemes (such as the one that covers Amit
Chandra), the National Old Age Pension Scheme for people living below the poverty line,
and the private pension schemes / funds.
Pension plans from life insurers could be another lucrative option, which not only lets you
plan for retirement in a structured systematic and disciplined manner but also provides
protection against uncertainties. So much so that there are plans today which even ensure a
guaranteed financial support for your spouse’s retirement even in your absence. These plans
offer a wide range of options in terms of various benefits and payment schemes. Subscribers

2. can opt for a payment plan based on their financial capacity, their projected needs after
retirement and on the basis of the age at which they plan to retire.
A pension plan can be purchased on a one-time lump-sum payment (a better choice for those
close to the age of retirement) or deferred payment of regular annual premiums over a period
of time, which younger people can opt for more comfortably. The benefit of income after
retirement can be disbursed immediately upon the subscriber’s retirement or, alternately, the
subscriber could choose to defer the payment wholly or in part till such a time as he or she
requires it; the monthly annuity would be calculated accordingly. Plans also allow for lifetime annuity payments or payment for a guaranteed period of time. Some plans also offer the
return of annuity amount to nominees, leaving behind a legacy for them.
Today, Amit and his wife are considering selling their two-bedroom apartment in Mumbai
and moving to a smaller, cheaper town — they are not sure where! They still need a place
where advanced medical care is available. This unhappy choice also means that will not
spend their golden years comfortably in the security of a familiar neighbourhood, with an
established support system run by long-known people, among old friends and regular
acquaintances.
For Amit’s daughter, such an unhappy choice is no choice — she and her husband have
begun to plan their future on realistic projections of pension needs and various eventualities,
working inflation into their calculations. She’s working on her Mona Lisa smile!
ByMs. Anisha Motwani,
Director & Chief Marketing Officer
Max Life Insurance