InvestorQ : How do pension plans work?
Pratik vyas made post

How do pension plans work?

Suresh Patil answered.
3 years ago

Pension plans are financial tools that allow an individual to save money today in such a manner that the corpus grows to provide for expenses in the future, usually post retirement.

There are a wide variety of pension plans available in the market and most of them can broadly be divided in two main parts:

1. Accumulation; this is when you pay premiums towards your retirement corpus

2. Distribution of corpus; this is when you are paid a regular income through an annuity plan after your retirement.

An annuity plan is a type of insurance which starts paying you an income from the start as per the various options chosen by you.