Review: How is SBI Pension Plan?

Recently one of my friend has asked me that, how is SBI Pension Plan? Should I Invest in them? I asked in reply 3 questions.

01) Do you Invest in Equity Mutual Funds?

02) Do you have term Life Insurance Policy?

03) Do you Invest in Tax Saving (80C) products (PPF, ELSS..etc..)

My Friend has answered “Yes” for all of the above 3 questions. And I am sure that, most of the people in India will answer “Yes” to all of the above 3 questions.

If you answer all of the above 3 questions – Yes. Than Don’t go for Pension Plans. Because the Pension Plans are nothing but the opaque mutual funds only. They will charge you anywhere between 10-20% entry fee and various other administrative charges and invest rest of the money in equity.

So instead of that why not invest in equity mutual funds which charge 0% entry load and buy separate term Life Insurance Policy? And simultaneously why not invest in 80C products such as PPF and ELSS to save tax which are more tax efficient options?

So In my opinion, Don’t go for any kind of Pension Plan. Instead of that go for Equity Diversified Mutual Funds + Term Life Insurance Policy + PPF / ELSS

It is cheaper to invest in all the things separately rather than going for Pension Plans.

Well, see. You try to understand the fact that, the Modern Pension Plans are not like old one. The old pension plans were Defined Benefits Pensions plans while the Modern Pension Plans are the Defined Contribution Pension Plans. So Don’t go for Pension Plans… It’s not a good financial decision…!!!