New Pension Plan

If the NEW PENSION SCHEME is launched from May 1, 2009 it will allow all Indian citizens to join the scheme with a minimum investment of Rs 6000/- annually. Indian citizens can hope to receive pension through their life. While this is a brilliant move according to me, it is to be seen how the ground realities actually work out!

Pension is a security blanket that can cover (if planned correctly) potential cost of living post retirement. While this may not always suffice, given the state of economy or inflation at least some part can be covered. This in turn gives economic security and financial independence to senior citizens. Daily there are stories of how children throw out parents due to the economic burden (it is possible that the emotional connect is also zilch) as medical costs & day to day living costs are spiraling. Having a pension and therefore economic security will go a long way in allowing senior citizens to live with dignity. While on my financial journey, have realized of the many mistakes I made from my early career days. So some observations from my own mistakes –

1. Save EARLY! At the start of your career itself start saving – whether its tiny sums of money put away in FDs / Recurring Accounts /PPF / Life Insurance . Those who are savvy and understand the market, start investing in shares, MF or ETF. Off course this is apart from the mandatory PF.
2. Medical insurance is a key requirement. You can also invest in your parents’ name. This will help during times of medical emergencies.
3. Think of the future, yes at 22 or 24 you don’t want to think of your life at 60! But imagine the financial dependence on others or penny pinching at that age. Financial Goals will keep changing at various stages of life but keep planning & be disciplined.
4. Think of inflation. As the AEGON Religare Pension Plan ad conveys the message of inflation brilliantly (by my fav actor Irfan Khan) and tells us that savings / pension plans need to be based keeping inflation in mind. Think of pension plans early in life as you will have to pay lower premiums.
5. If you are not financially savvy take the help of a professional.
6. If you do invest in shares/ mutual funds keep track of your portfolio regularly.