Retirement opens up a new phase of life in an individual’s life. You finally have the time to check all the things on your bucket list. Hence, you need adequate funds so that you don't have to compromise on your lifestyle during those post-retirement years.
In the absence of a regular source of salary or income you have to rely entirely on your savings and investments.
Living costs will rise by the time you retire. You also have to take into account medical emergencies and other unforeseen expenses. Thus, to fund your old-age expenses, you need careful planning.
Pension funds can provide a supporting income, letting you enjoy complete financial freedom in your golden years.
Let us understand a bit about pension funds

What are pension funds?
Pension funds are financial tools that help you in accumulating funds for your post-retirement years. By investing a certain amount regularly towards your pension fund, you will build up a considerable sum in a phase-by-phase manner. They generally have two stages–
• Accumulation stage: You pay a specific amount regularly until you retire.
• Vesting stage: Once you retire, you get a steady flow of income for life.

Types of Pension funds in India
1. NPS
The government of India introduced the National Pension Scheme (NPS) as a financial cushion for retired persons. Some of its features are as follows:
• You have to invest in this scheme until 60 years of age.
• The least sum you must invest is ₹ 1000. There is no upper limit.
• Your money will be invested in debt and equity funds based on your preference.
• The returns depend on the performance of the funds you choose.
• When you retire, you can withdraw 60% of the savings.
• You must use the remaining 40% to buy an annuity – a retirement plan offering periodic income.
2. Public Provident Fund (PPF)
PPF is a long-term investment scheme with a 15 years' tenure. Thus, the impact of compounding is enormous, especially towards the end of the term.
Every year you can invest a maximum of ₹ 1.5 lakhs in your PPF account. You can pay upfront or through twelve instalments staggered over the financial year. Your PPF investments are eligible for tax deductions* under Section 80C of the Income Tax Act (ITA).
The government sets the interest rate on PPF every financial quarter, based on the profits from government securities. The funds are not market-linked.
3. Employee Provident Fund (EPF)
EPF is a government savings platform for salaried employees. Both your employer and you have to make equal contributions towards your EPF account. Your share is removed from your salary every month. The Employees' Provident Fund Organisation (EPFO) sets the interest rate on the investment. On retirement, you receive the total funds contributed by you and your employer along with the accrued interests.
4. Annuity plans with life cover
Such plans provide a life cover along with a regular source of income. If an unfortunate event occurs while the plan is active, your family member receives a lump-sum payout, however there are other options too that do not offer this financial coverage. Annuity plans are of two types:
A. Deferred Annuity
It is a contract with an insurance provider helping you build a retirement corpus. You can make a single lump-sum payment or pay regular premiums over a fixed time-frame – the policy term. Thus, this scheme helps you invest as per your resources.
When the policy period ends, your pension starts. If your retirement date is far in the future, this plan is suitable for you.
B. Immediate annuity
It is a contract between an individual and insurance company, where in the individual pays a lump sum amount and receives guaranteed income for lifetime, starting almost immediately.
Guaranteed Pension Plan is one such retirement policy that offers both Immediate and Deferred Annuity options. It offers several benefits:
• A lifelong guaranteed income
• Eleven annuity options, including pension for your spouse/family member or return of purchase price to your nominee in your absence
• Options to avail income on a monthly, quarterly, half-yearly, or annual basis
• Top-up option to systematically increase your annuity income
• Attractive discounts for NPS subscribers or existing customers
• Tax benefits* on the premiums paid
• Option for lump-sum payout on the diagnosis of critical illnesses or permanent disability is covered under the plan
• Options to get back the purchase price earlier in your lifetime
Thus, this plan secures you against all age-related exigencies and can be a lucrative financial cover in your retirement years.