Planning your retirement while working in the UAE or elsewhere abroad? We understand the unique challenge you face - you're earning in foreign currency today but dreaming of a comfortable retirement in India tomorrow.
At Belong, we've helped thousands of NRIs navigate this exact journey, and one question keeps coming up: "Which pension plan should I choose that's safe, tax-efficient, and actually works for someone living abroad?"
This comprehensive guide breaks down the best pension options available for NRIs in 2025, comparing everything from LIC's guaranteed plans to market-linked NPS, with real returns, tax implications under DTAA, and the documentation you'll actually need.
Why Standard Fixed Deposits Aren't Enough for Your Retirement
Here's what most NRIs discover too late: keeping all your retirement savings in NRE or NRO fixed deposits might feel safe, but with bank FD rates hovering around 7-7.5% and inflation eating away 4-5% annually, your real returns are barely 2-3%.
That ₹1 crore you're planning to retire on? In 15 years, it'll have the purchasing power of just ₹50-60 lakhs.
Pension plans solve this by offering structured payouts, often with guaranteed returns that beat inflation, plus significant tax benefits that FDs simply don't provide.
Many of our users at Belong initially hesitated about pension plans, thinking they were too complex or inflexible.
The reality?
Modern pension schemes for NRIs have evolved significantly, offering everything from immediate payouts to deferred annuities with online investment options.
Can NRIs Actually Invest in Indian Pension Plans?
Yes, absolutely. Most insurance companies in India offer comprehensive pension plans designed specifically for NRIs, including companies like SBI, LIC, and Bajaj Allianz.
The regulations have become increasingly NRI-friendly, with even OCI cardholders now eligible for most plans.
The key difference from resident Indians? You'll need to invest through your NRE or NRO account, and the documentation process is slightly different. But here's the good news - you can now complete most applications online without visiting India, a massive improvement from just five years ago.
👉 Tip: Always invest pension premiums from your NRE account rather than NRO to ensure easier repatriation of maturity proceeds later.
Top 5 Pension Plans Every NRI Should Consider
1. LIC Jeevan Akshay VII - The Immediate Income Champion
If you're already 55+ and want pension payments to start immediately, LIC Jeevan Akshay VII is hard to beat. This single premium, non-linked immediate annuity plan offers 10 different annuity options and requires no medical examination.
Key Features:
- Minimum investment: ₹1,00,000 (₹1,50,000 for online purchase)
- Annuity rates are guaranteed at policy inception and remain fixed for life
- Payment options: Monthly, quarterly, half-yearly, or yearly
- Special provision for disabled dependents with minimum investment of just ₹50,000
Returns Example: A 60-year-old investing ₹50 lakhs can expect approximately ₹30,000-35,000 monthly pension for life, depending on the chosen option.
Best For: NRIs above 55 who want guaranteed income starting immediately without market risks.
2. National Pension System (NPS) - The Market-Linked Growth Option
NPS allows NRIs between 18-60 years to invest with a minimum contribution of just ₹6,000 annually. What makes it special? The flexibility and potential for higher returns through equity exposure.
Key Features:
- Up to 50% allocation to equities allowed
- Online account opening available for NRIs
- Partial withdrawal allowed after 3 years (up to 25% of contributions)
- Tax benefits under Section 80C and additional ₹50,000 under 80CCD(1B)
- At maturity, 60% can be withdrawn tax-free, 40% must go into annuity
Returns Example: Historical returns have ranged from 9-12% annually for balanced portfolios. An NRI investing ₹5 lakhs annually from age 35 could accumulate ₹3-4 crores by 60.
Best For: Young NRIs (under 45) comfortable with market exposure and seeking potentially higher returns.
3. LIC Jeevan Shanti - The Flexible Deferred Option
For NRIs who want to invest now but start receiving pension after a few years, Jeevan Shanti offers deferment periods from 1 to 12 years. The beauty? Higher returns than immediate annuity plans.
Key Features:
- Single premium payment
- Joint life options available
- GST exemption for NRIs paying from NRE account since October 2021
- Guaranteed returns regardless of market conditions
- Loan facility available after policy issuance
Best For: NRIs aged 35-55 who want to lock in guaranteed returns now for future retirement income.
4. HDFC Life Click 2 Retire - The ULIP Pension Hybrid
For NRIs seeking growth potential with insurance benefits, ULIP-based pension plans offer an interesting middle ground. These plans invest part of your premium in market-linked instruments for growth and the rest in life insurance for protection.
Key Features:
- Choice of investment funds (equity, debt, balanced)
- Option to customize portfolio based on risk tolerance
- Life cover along with pension benefits
- Online purchase and management available
- Fund switching options to manage risk
Best For: NRIs under 50 who want both wealth creation and life insurance in a single product.
5. GIFT City Fixed Deposits - The New Tax-Free Alternative
While not technically a pension plan, GIFT City FDs deserve mention as they offer guaranteed returns in USD with complete tax exemption. At Belong, we've seen many NRIs use these as part of their retirement portfolio.
Key Features:
- Returns up to 5.4% in USD
- Zero tax on interest (no TDS, no income tax)
- Protection from rupee depreciation
- Easy repatriation
- Minimum investment from $10,000
Best For: NRIs wanting USD-denominated retirement savings with guaranteed returns and zero tax.
👉 Tip: Diversify your retirement portfolio - consider 40% in guaranteed plans like LIC, 30% in NPS for growth, and 30% in GIFT City FDs for currency protection.
When Should You Actually Start Your Pension Planning?
The mathematics is compelling: starting at 35 versus 45 can literally double your retirement corpus. Here's a real example from our Belong community:
Scenario 1: Starting at 35
- Monthly investment: ₹50,000
- Years to retirement: 25
- Expected corpus at 60: ₹4.5 crores (at 10% returns)
Scenario 2: Starting at 45
- Monthly investment needed for same corpus: ₹1.5 lakhs
- Years to retirement: 15
- Total investment required: 3x more than starting at 35
The lesson? Every year of delay costs you exponentially. If you're over 40 and haven't started, the second-best time is today.
Documentation Checklist for NRI Pension Plans
Before you begin any application, gather these documents:
Essential Documents:
- Passport with valid visa stamps or OCI card
- PAN card (ensure it's linked to Aadhaar)
- Overseas address proof (utility bill, bank statement)
- NRE/NRO account details
- Income proof from country of residence
- Recent photograph
Additional for Some Plans:
- Form 15CA/15CB for investments above ₹7 lakhs
- Life certificate from Indian embassy (for some insurers)
- Power of Attorney (if applying through representative)
Tax Benefits That Actually Matter for NRIs
Understanding the tax implications can save you lakhs. Here's what applies to NRIs:
Under Indian Tax Laws:
- Premiums qualify for deduction up to ₹1.5 lakh under Section 80C
- Additional ₹50,000 deduction for NPS under Section 80CCD(1B)
- Maturity proceeds from qualifying plans may be tax-exempt under Section 10(10D)
- NPS allows 60% tax-free withdrawal at maturity
Under DTAA Benefits:
- Most DTAA agreements help avoid double taxation on pension income
- India-UAE DTAA provides specific exemptions for pension income
- Tax paid in India can often be credited in your country of residence
👉 Tip: Consult our DTAA benefits calculator to understand your specific tax situation based on your country of residence.
Common Investment Mistakes NRIs Make (And How to Avoid Them)
Mistake 1: Waiting for the "Perfect Time"
Many NRIs wait for rupee depreciation or better interest rates. Meanwhile, they lose years of compounding. Solution: Start with a smaller amount and increase gradually.
Mistake 2: Ignoring Inflation Impact
A ₹50,000 monthly expense today will be ₹1.5 lakhs in 20 years at 6% inflation. Solution: Choose plans with annual increment options or inflation-adjusted returns.
Mistake 3: Not Considering Healthcare Costs
Medical expenses can derail retirement plans. Solution: Keep 20% of your retirement corpus specifically for healthcare, separate from living expenses.
Mistake 4: Over-Reliance on Single Currency
Keeping everything in rupees or foreign currency creates risk. Solution: Diversify with both INR and USD investments.
The Step-by-Step Process to Start Investing
For LIC Plans:
- Visit LIC's official website or authorized NRI service providers
- Choose your plan and calculate premium using online calculator
- Complete online application with digital KYC
- Transfer premium from NRE/NRO account
- Receive policy document via email within 7-10 days
For NPS:
- Visit npscra.nsdl.co.in for online enrollment
- Complete e-KYC with passport and overseas address proof
- Select pension fund manager and investment choice
- Make initial contribution (minimum ₹6,000 annually)
- Set up standing instruction for regular contributions
For GIFT City Products:
- Download the Belong app for simplified access
- Complete digital KYC verification
- Choose your investment amount and tenure
- Transfer funds from NRE account
- Receive confirmation and start earning immediately
Repatriation Rules: Getting Your Money Back Abroad
This is crucial for NRIs: Most pension plans offer repatriation benefits, allowing you to transfer retirement funds to your country of residence. Here's how it works:
For Annuity Payments:
- Monthly pension can be credited to NRE account
- Freely repatriable if premiums paid from NRE account
- No limit on repatriation amount
For Maturity Proceeds:
- Lump sum amounts fully repatriable
- Form 15CA/15CB required for amounts above ₹7 lakhs
- TDS certificate needed for claiming DTAA benefits
Building Your Personalized Retirement Strategy
Here's a framework we recommend at Belong based on your age:
Age 30-40: Growth Focus
- 50% in NPS (equity-heavy allocation)
- 25% in GIFT City FDs for stability
- 25% in ULIPs for insurance plus growth
Age 40-50: Balanced Approach
- 30% in NPS (balanced allocation)
- 40% in guaranteed plans (LIC Jeevan Shanti)
- 30% in GIFT City FDs
Age 50+: Security Priority
- 50% in immediate/deferred annuity plans
- 30% in GIFT City FDs
- 20% in liquid NRE FDs for emergencies
👉 Tip: Use our NRI investment calculator to compare actual returns across different pension plans.
Special Considerations for UAE-Based NRIs
Living in the UAE gives you unique advantages:
- No tax on foreign income in UAE means full benefit of Indian tax deductions
- Strong India-UAE DTAA agreement prevents double taxation
- Easy documentation with Emirates ID accepted by most insurers
- Multiple remittance options with competitive exchange rates
Many of our Belong community members in Dubai and Abu Dhabi have successfully invested in Indian pension plans while managing their UAE banking alongside.
The Hidden Costs Nobody Talks About
Before committing, understand these often-overlooked expenses:
Currency Conversion: Converting AED/USD to INR for premiums costs 0.5-1% in forex charges. Solution: Use specialized NRI remittance services for better rates.
GST on Premiums: 18% GST applies to insurance premiums, though NRIs get exemption when paying from NRE accounts for certain plans.
Early Exit Penalties: Most pension plans have lock-in periods. Surrendering early can cost 20-30% of your investment.
TDS on Annuity: 30% TDS applies on pension payments unless you submit Form 15CA/15CB for lower deduction under DTAA.
Real Stories from NRIs Who Got It Right
Case Study 1: Rajesh, 42, Dubai Started NPS at 35 with ₹10 lakhs annually. Current corpus: ₹95 lakhs. Expected at 60: ₹4.2 crores. "The tax benefits alone save me ₹50,000 yearly."
Case Study 2: Priya, 58, Abu Dhabi Invested ₹75 lakhs in LIC Jeevan Akshay. Receives ₹52,000 monthly. "The guaranteed income gives me peace of mind about returning to India next year."
Case Study 3: Amit, 45, Sharjah Split ₹1 crore between Jeevan Shanti (₹60 lakhs) and GIFT City FDs (₹40 lakhs). "Currency diversification protects me from rupee volatility."
How GIFT City Changes the Retirement Game
GIFT City's emerging financial ecosystem offers NRIs unprecedented advantages. Beyond traditional pension plans, you can now access:
- Alternative Investment Funds for sophisticated investors
- USD-denominated bonds with tax-free returns
- International securities through NSE IFSC
At Belong, we're pioneering these GIFT City investment options specifically for NRIs, making them as accessible as traditional FDs.
Your Next Steps: Taking Action Today
Calculate Your Retirement Needs: Use our retirement calculator to determine your target corpus
Check Your Residential Status: Confirm your NRI status for tax planning
Compare Options: Download our comprehensive comparison sheet of all pension plans
Start Small: Begin with one plan, even if it's a minimal investment
Join Our Community: Connect with 15,000+ NRIs in our WhatsApp group for real experiences and advice
Beyond Pension: Complete Retirement Planning
Remember, pension plans are just one piece. Consider these complementary strategies:
- Health Insurance: Ensure adequate health coverage for post-retirement medical needs
- Real Estate: Understand property investment rules for NRIs
- Emergency Fund: Maintain 12-18 months of expenses in liquid NRE deposits
- Estate Planning: Create a will considering both Indian and foreign assets
Conclusion: Your Retirement, Simplified
Choosing the right pension plan doesn't have to be overwhelming. Whether you opt for LIC's guaranteed returns, NPS's growth potential, or GIFT City's tax-free options, the key is starting now. Every month of delay costs you in lost compounding and tax benefits.
At Belong, we've simplified this entire process. Our platform helps you compare plans, complete documentation, and invest directly from your phone. More importantly, you join a community of NRIs who've successfully navigated this journey.
Ready to secure your retirement? Download the Belong app to explore GIFT City's tax-free investment options, compare pension plans with our tools, and get personalized guidance from our SEBI-registered advisors.
Have questions? Join our exclusive NRI retirement planning WhatsApp community where 15,000+ members share experiences and expert advisors answer queries daily.
Remember, the best retirement plan is the one you actually start. Take that first step today.
Disclaimer: This article is for informational purposes only. Please consult a qualified financial advisor for personalized retirement planning advice.
Sources: RBI Guidelines for NRIs | PFRDA NPS Portal | Income Tax India | LIC India
