How NRIs Can Build a Retirement Corpus in India While Living Abroad

As we know, retirement is a critical phase of life for which advance planning is a must. A pension plan is an investment plan that is well-designed to fulfil all your day-to-day needs after you retire. One can also save by investing money through regular payments or a lump sum over a specified period. The Best Retirement Plans available in the market ensure a stable income during retirement years, ensuring financial security. 

NRIs are citizens of India who are temporarily living in India, having a valid government-issued Indian passport. Also, citizens who reside abroad on a Visa for employment or business purposes are also known as NRIs. The investment plans for NRIs include Mutual Funds, Retirement Plans, NPS, ULIPs, Real Estate, equity, etc. Also, some plans offer tax-free investment options, which help increase wealth. 

Features of Pension Plans for NRIs

Provided are the features of Best Retirement Plans for NRIs:

• Regular Income: 

NRIs can decide how they want to receive funds, i.e. whether monthly, quarterly, semi-annually, or annually, once they retire.

• Life Coverage:

Additionally, some retirement plans also include insurance coverage along with pension benefits, which offer financial security to the individual’s family members in case of their sudden demise.

• Flexibility:

These plans offer flexibility, allowing you to choose from a wide range of available plans with different policy tenures, aligning the plans with your financial objectives.

• Market-Linked Growth:

Some retirement plans, such as ULIPs, offer returns linked to the market, allowing you to reap benefits depending on the market performance.

• Lump Sum Payouts Option:

Some of the plans provide options to withdraw funds either fully or partially, further providing flexibility to access funds as & when required.

Reasons to Choose Pension Plans for NRIs

Provided are the reasons why Retirement Planning is crucial for NRIs:

• Financial Security:

These plans provide financial security by offering a regular income stream, which further helps NRIs maintain their current lifestyle. Additionally, this planning helps individuals achieve financial independence after retirement.

• Taxation Benefits:

Certain retirement plans in India offer tax benefits, including exemptions & deductions, further increasing the amount of retirement savings.

• Diversification of Assets:

It means maintaining a balance between long-term & short-term investments to build a well-diversified portfolio. This will reduce the overall risk of the portfolio & will help maintain a balance between risks & returns. It includes many plans such as endowment plans, money back plans, whole life plans, etc., to cater for the different financial requirements.

• Interest Rates:

In India, the interest rates might be on the higher side in comparison to other countries, hence offering higher returns to NRIs.

How to Choose an Appropriate Pension Plan for an NRI?

Provided are some key considerations to be kept in mind while choosing a pension plan for NRI:

• Evaluate Risk Tolerance

Assess the risk tolerance level, i.e. in case you are willing to accept high-risk, market-linked plans can be opted for. On the contrary, risk-averse investors can opt for stable income plans.

• Consider Liquidity Needs

Consider the withdrawal options offered by investment plans, i.e. some plans allow withdrawal of funds partially. While in the case of some other plans, it allows withdrawal of funds after a definite period only.

• Underst& Tax Implications

Have a better understanding of the impact of taxes both in the resident country & in India to avail the tax benefits.

• Check for Returns & Growth Potential

Look for the expected growth of multiple plans along with the returns offered to maintain a balance between the plans & returns.

• Look for some Additional Benefits

Look for any additional benefits offered, such as accidental riders, critical illness riders, & enhanced financial protection.

Different Pension Plans Available for NRI

Provided are the Best Retirement Plans available for NRIs:

• Life Insurance Plan

1. It offers the dual benefit of income & insurance.
2. Hence, offering NRIs life coverage with a retirement corpus.

• Public Provident Fund (PPF)

1. It is a long-term investment type with a tenure of 15 years.
2. It offers guaranteed returns.
3. Also, it provides taxation benefits.
4. These are attractive & low-risk investment options for NRIs.

• National Pension Scheme (NPS)

1. The government of India introduced this plan to secure the financial future of the policyholder post-retirement.
2. Here, the return on investment is generated by investing the funds in NPS.
3. They require regular contributions to be made towards retirement.
4. It allows flexibility in switching between the debt & equity funds, offering a scope of growth & security.

• Unit-Linked Insurance Plan (ULIP)

1. ULIP offers dual benefits of insurance & investment, allowing for wealth growth & financial security for family members.
2. It offers many fund options, such as equity for high growth & debt for stability, which fulfil all types of risk tolerances.
3. It provides flexibility, allowing you to switch your investments according to market conditions & your risk tolerance level.
4. They offer insurance benefits in addition to the market-linked returns.

• Fixed Deposit

1. They offer guaranteed returns with high interest rates compared to a savings account.
2. Many banks offer fixed deposits & NRE/ NRO accounts with interest rates.
3. They offer NRIs safe investment options & consistency in returns.

Conclusion

As NRIs are allowed to invest in India, they should be well aware of the rules, regulations, taxes, & documentation required to do so. To make an informed decision, they can also take expert or professional advice, which will help them align the investment plan with their financial goals. Choosing the right pension plan is an important step for NRIs, which should well align with the risk tolerance level, financial objectives, & tax preferences of NRIs. Pension plans help provide a steady flow of income, hence maintain financial stability.