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Future tense

Srikala B.

Ten years ago, if you had asked a 25-year-old employee what his retirment plans (investments) were, he would have stared right back at you. Planning investments for the retired life would have been the last thing on his mind.

But not so anymore.

The younger generation today is already drawing up its future cash flow and planning investments for post-retirement. The options at hand, unfortunately, are limited at present.

Even though privatisation has been the buzzword since 1991, it is yet to encompass the pension fund sector. As a result, Life Insurance Corporation of India and Unit Trust of India are the two agencies offering pension schemes in India. LIC's two schemes -- Jeevan Suraksha and Jeevan Dhara -- have been a big hit with investors. UTI, too, has two pension plans to its credit -- Senior Citizen's Unit plan and Retirement Benefit plan.

The other choice for investors are the monthly income plans (MIP) of mutual funds. Like UTI, even the private sector mutual funds are aggressive in the MIP market these days. With the returns ranging from 11-13 per cent, MIPs are growing in acceptance, s ay industry sources.

And then, there are those old and reliable fixed deposit schemes for those who go by the old school of thought. You may not have non-banking finance companies chasing you for your excess cash or brokers offering you huge incentives on FDs, but there are enough manufacturing companies and banks that accept FDs. The returns, of course, are much lower at 11-13 per cent compared to 15-18 per cent in the past.

For those looking for tax benefits while planning retirement savings, PPF is the best option. In a falling interest regime, the 12 per cent return looks even more attractive.

Of course, there is always the added charm of equity markets. History has shown that equity investments have always returned more than other instruments. But you would be prudent if you have a mix of all the above instruments! And the earlier you plan, t he better.