The Fact Maker

Why pension planning at a young age is beneficial for your retirement?

This post will explore the importance of pension planning at a young age. The idea is that people who start early have more time to save and invest their money, which means they’ll be able to retire with more funds than someone who starts later in life or waits for retirement before starting at all.

What is Pension Planning?

Pension Planning is an investment vehicle designed to provide income to retirees through employer-sponsored deferred compensation. The plan may allow you to defer paying taxes on your earnings and the plan contributions until the time when funds are withdrawn from the account. Some employers offer matching contributions or profit-sharing into your pension fund as well.

Why is pension planning beneficial?

There are a lot of financial benefits to starting your pension planning early. In one example, the amount saved into a pension plan at age 35 will have accumulated over INR 1 CR by the time the account holder reaches age 60. However, the same amount saved at age 45 will only amass over INR 40 Lakhs by retirement. That’s pretty substantial!

How long do you have to work before being eligible for pension benefits?

Most pension planning requires you to reach age 60 or some other age at which you are qualified to receive Medicare. Employers may also require a minimum number of hours worked in order for you to be eligible for your employer’s pension plan.

Is there a minimum amount of money I must contribute to the plan?

The vast majority of employers do not require employees to contribute a certain amount to the pension plan, but your employer may set up an employee contribution match if they choose. Make sure you have a good idea of your employer’s pension planning and what contributions they require.

Where can I find information on pension plans?

If you have questions about your employer’s pension plan or are looking for a new job, the Indian Accounting Standard (Ind AS) has a wealth of information on pensions and pension plans, including how to compare retirement benefits plans when searching for your next job.

Are there any different types of pension plans?

Pension plans can be either a defined benefit or a defined contribution plan.

Defined Benefit (DB) Plans – This is a traditional pension planning, which is typically offered to workers who have achieved some period of service with their employer. Employers will usually guarantee a certain income at the time of retirement and payout according to the terms of the plan established.

Defined Contribution (DC) Plans – The amount contributed to these plans depends on what you choose and what your employer decides to put in. Some employers may contribute up to 100% of the amount contributed, while others may kick in a smaller percentage.


Pension planning offers benefits to employees and retirees. Usually, employers are the ones who pay for the pension contributions, but you can choose to put money into your own account so that you are contributing a portion of your salary. You should discuss the amount you will contribute with your employer and if they will make contributions on your behalf as part of their pension plan.