Investing In Pension Plans Early Can Build A Rs 5.32 Cr Corpus In 20 Years
While market-linked plans offer the potential for high returns, investors must factor in market risks, lock-in periods, and taxable annuities, says Policybazaar’s Sameep Singh
Investing In Pension Plans Early Can Build A Rs 5.32 Cr Corpus In 20 Years

Pension plans provide a structured approach to retirement planning, allowing individuals to build a substantial corpus over time.
According to an analysis by Policybazaar, investing in market linked pension plans with an assumed annual return of 15 per cent can help in divisible accumulation up to rupees 5.32 crore over 20 years. A major benefit of these plans is the ability to withdraw 60 per cent of the corpus tax-free, irrespective of the investment amount. While the remaining amount is mandatorily invested in annuity to ensure post-retirement income.
Sameep Singh, investment product head of Policybazaar explains, “Market-linked pension plans provide a smart, structured way to build your financial future. By consistently contributing, investors can leverage compounding to accumulate significant wealth over time”.
A pension plan requires regular contributions for a set period. These contributions grow through equity-based investments benefiting from compounding. At maturity, the investor can withdraw a portion of the corpus tax-free, while the rest must be converted into an annuity.
As per Policybazaar calculations, assuming a 15 per cent compounded annual growth rate (CAGR): 1) A Rs 10,000 monthly investment can grow to Rs 1.06 crore in 20 years with Rs 63.6 lakh available for tax-free withdrawal. 2) A Rs 50,000 monthly investment can grow to Rs 5.32 to crore allowing a Rs 3.19 crore tax-free withdrawal.
A higher CAGR results in significant corpus growth over time, making early and consistent investment crucial. Investors can withdraw 60 per cent of the copper tax-free, regardless of the investment amount. The remaining 40 per cent is mandatorily invested in annuity, ensuring lifelong financial security post-retirement.
Returns depend on market performance, making them unpredictable. A 15 per cent CAGR is an assumed figure and actual returns can be lower. Funds remain locked in for the policy term, restricting access to capital in case of emergencies. While annuities provide a stable income, their returns are generally lower than market-linked investments. While 60 per cent of the corpus is tax-free, the annuity income from the remaining 40 per cent is taxable as per the investor’s income tax slab.