I was approached by an insurance agent to take a pension plan with capital guarantee. As a government employee, I am part of the New Pension Scheme (NPS). Should I still consider taking this policy? - Saket Sharma, New Delhi
Both the NPS and the capital protection pension plans from life insurers qualify for tax benefits under Section 80C. The NPS caps investments to equities at 50 per cent, something that even the capital guarantee plans do. But such similarities alone should not base your decision to opt for such a pension plan. What you need to consider is your need for such a product and how it works. For instance, annuities from pension plans are taxable, which means that taking the non mandatory pension plan could save you on taxes when contributing, but the payout will not be tax-free. If you are looking to build a retirement corpus, there are several other options worth considering depending on your risk profile and needs.
