What NRIs should know about retirement planning?

What NRIs should know about retirement planning

Authored by: Vivek Jain, Head – Investments, Policybazaar.com

India’s economic growth continues to be on a healthy track despite the global slowdown of economic activities, like inflation, and geopolitical tensions. With a forecasted growth rate of 7%, India is projected to be the fifth-largest economy in the world in terms of size, as reported by the International Monetary Fund (IMF). It is, therefore, viewed as a secure investment option – not only for Indian citizens but also for Non-Resident Indians (NRIs) who want to expand their investments back in their home country.

Thus, if you are someone who is settled outside the country but looking for investment plans, especially when it comes to safeguarding your retirement financially, then it is an opportune time. So, from the variety of available options, here are a few plans that NRIs should consider to grow their wealth –

Guaranteed Return Plan

A plan worthy of consideration for NRIs, owing to its key feature of a guaranteed return, is the Guaranteed Return Plan. Under this, the investor locks in the rate of return at the time of purchase, making it well-suited for those looking for a safe investment option to meet their retirement goals. In addition, this plan offers a return that, when compared to other investments like FDs or PPFs, is significantly higher, ranging from 6 to 7.5 percent, depending on the terms and conditions. Furthermore, it makes them eligible for a GST refund provided they have a non-resident external account in India as an NRI. Therefore, designed for risk-averse investors seeking a secured investment with the attributes of tax benefits and life insurance, the Guaranteed Return Plan makes for a versatile pick.

Capital Guarantee Plan

The Capital Guarantee Plan is another policy that gives good returns as long as you have a moderate appetite for risk. In this case, a part of the investment—nearly 50 to 60 percent—is invested into debt funds, which thereby secures the principal amount from any risks. The remaining amount, on the other hand, is invested in equity to let them enjoy the favourable side of the market. Besides being a fine blend of insurance and investment products, it further aids in accumulating a sizable retirement fund as it offers tax-free returns and benefits. Additionally, it provides the flexibility of yearly, monthly, quarterly pay-outs, making it a great choice. Hence, if you are looking for a plan that can help you diversify your investment portfolio while also reaping the benefits of the market, go for this one plan. 

Annuity Plans

This plan is regarded as an apt retirement plan mainly because it invests your funds strategically to offer a steady income. It further lets the investor select payment options, i.e., yearly, monthly or even quarterly, which makes it popular as a great retirement plan. Additionally, the Annuity plan is available for a minimum age of 18 years and goes up to 80 to 99 years, depending on the plan chosen. It also offers the investor two options – Deferred and Immediate Annuity. Under the former, the policy buyer can get a regular income or a lump sum amount after a certain period or on a specific date in the future, thus, making for a supplementary retirement income. The Immediate Annuity plan, on the other hand, is a straightforward plan that facilitates receiving a pension instantly. 

An attribute that makes the Annuity plan appealing is that it shields the principal amount and pays it back to the nominee in the unfortunate event of the death of the policyholder. Lastly, being non-taxable and offering an advantage under sections 80C and 10(10D) of the Income Tax Act 1961 makes it a plan appropriate for life after retirement.

To summarize, it is a good time for NRIs to evaluate investment options in India because of India’s consistent economic development owing to firmed-up urban consumption and driven by a sustained recovery in spending. The plans mentioned are among the best available options, as they have an aspect of returns as well as protection. However, before investing, it is advisable to examine every plan and its features online. Also, investing early and for the long term will enable accumulating an adequate corpus. So, invest in what suits you best and know the terms and conditions for no surprises and an informed decision. 

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