Last Updated:June 20, 2025, 19:30 IST
If you’re not open to market risks, it is important to choose safer investment options like NPS, Debt Funds and government-backed retirement benefit schemes.
Government securities are generally seen as safe investment options. (Representative Image)
Investing in pension funds is a smart way to prepare for life after retirement. With rising expenses and increasing healthcare costs, it’s not advisable to depend only on a pension and support from your family. You can make investments in several retirement benefit schemes for additional income in your golden years.
A good pension plan helps you stay financially independent and manage your day-to-day expenses when you are no longer working. If you’re not open to market risks, it is important to choose safer investment options like NPS, Debt Funds and government-backed retirement benefit schemes.
Below are a few smart and low-risk ways to invest in pension funds effectively:
Choose Government-Backed Pension Schemes
Start with safe and trusted options like the National Pension System (NPS) and Atal Pension Yojana (APY). These are regulated by the government and offer relatively low-risk returns. NPS especially provides the flexibility to invest in low-risk mutual funds while enjoying tax benefits under Section 80C and 80CCD. Under NPS, you can withdraw 60% of the corpus fund as lump sum after retirement and use the remaining 40% for annuity or pension.
Opt for Debt-Oriented Pension Funds
Many mutual fund houses offer debt-oriented pension plans, where a large portion of the investment goes into government securities, bonds, and other fixed-income instruments. These are less volatile compared to equity funds and ideal for risk-averse investors.
Start Early and Invest Consistently
Even in low-risk funds, time and consistency are your allies. The earlier you start, the more your money compounds over time. Setting up systematic investment plans (SIPs) into pension schemes ensures disciplined investing and reduces market timing risk. You can even invest in government-backed long-term investment schemes like Public Provident Fund (PPF), which help in long-term wealth accumulation with tax benefits.
Diversify Within Pension Products
Allocate your pension investments across different low-risk instruments — such as NPS, PPF (Public Provident Fund), and low-risk pension funds — to reduce dependency on a single source. Diversification minimises the risk and even offers higher returns.
Review and Rebalance Periodically
Though your aim is low risk, it’s still important to review your portfolio once a year. Rebalancing ensures that your fund allocation stays in line with your age, risk profile, and retirement goals.
Consult a Financial Advisor
Finally, if you’re unsure about where to begin or how much to invest, speaking with a certified financial planner can help tailor a pension strategy best suited to your income, investment horizon and risk appetite.
By following these steps, you can grow your retirement corpus safely while avoiding unnecessary financial stress in retirement years.
A team of writers and reporters decodes vast terms of personal finance and making money matters simpler for you. From latest initial public offerings (IPOs) in the market to best investment options, we cover al…Read More
A team of writers and reporters decodes vast terms of personal finance and making money matters simpler for you. From latest initial public offerings (IPOs) in the market to best investment options, we cover al… Read More
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