Pension plans provide a guaranteed source of income in the form of annuity during retirement. However, they don’t provide immediate liquidity for emergencies and offer limited choice in terms of diversification and investment styles. The premium paid towards a pension plan is tax deductible.
Mutual Funds investments are not tax deductible unless you have invested in an ELSS fund but they offer you much more variety and flexibility in designing a retirement plan as per your need. If you are young, you can start SIPs in equity funds suiting your risk preference and continue the SIPs close to your retirement. You would have built a good corpus by then which can be transferred to short-term debt funds through STP(Systematic Transfer Plan) 2-3 yrs prior to retirement to reduce your
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