There are other equity-based instruments as well, which provide good returns over time. These are equity linked savings schemes (ELSS). In addition, there are also pension plans from both mutual funds and insurance companies that invest in debt and equity instruments. Pension plans by mutual funds  have a three-year lock-in like ELSS.

At present, there are two such options - UTI Retirement Benefit Pension Plan (UTI RBP) and Templeton India Pension Plan (TIPP). Both these schemes are eligible for the tax benefit that is available for the investment made during the year up to a sum of Rs 1 lakh under Section 80C. These pension plans have been in the existence for more than 10 years each. So, there is a past track record that investors can look at before investing.

Here it's important that an investor understands the difference between pension plans being offered by mutual funds and insurance companies. The latter seek to provide a regular flow, in the form of annuities for the investors.

The mutual funds that provide these schemes target the same objective, but they achieve this through the workings of a normal mutual fund. That is, the pension amount will be paid to the investor once they turn 58 years by redeeming a specific number of units each month.

Investors also have the option of withdrawing the entire amount and close the investment. There is no compulsion for the investors to keep their money after retirement with the scheme and this gives them the required flexibility.

The schemes are open-ended in nature. One can invest in them anytime during the year. There are various ways, in which, the investor can put in their money.

This could through a one-time lump sum payment or a regular investment using a systematic investment plan (SIP). Also, one need not continue the investment for a certain number of years, like in case of many insurance policies.

Further, while the pension benefit will start only after the completion of 58 years, there is an option to withdraw the money anytime after the initial three years.

The only cost will be in the form of an exit load that will be levied depending upon the time period for which the investor remained with the scheme. This is probable the most interesting aspect for the investor. These schemes are balanced schemes. The returns, therefore, can be expected to be lower than a pure equity option, but higher than a debt option.

The risk is correspondingly similar to a balanced option. It's important to remember that unlike a pure debt investment, where the return is fixed and there is little chance of a loss, investors do face some equity risk in these schemes.

For instance, in the last one year UTI RBP has lost 11 per cent while the TIPP has lost 19 per cent. Of course, it is much less compared to the Sensex loss of 44 per cent. For UIT RBP, the return since its launch (December 1994) is 10.31 per cent where as for TIPP (March 1997) is 12.81 per cent. But when the markets turn around, the returns can be much better. But this is a trade-off. This is not a short-term route, but one that is suitable for those looking to build wealth over a longer time frame.

The writer is a certified financial planner.