Pension Plans or Mutual Funds, which is better for retirement planning?

In India, life insurance companies generally provide pension plans. But even Government of India came up with NPS (National Pension System). The pension plan in India has two parts viz. accumulation and distribution. In the accumulation phase, you would pay premium to the insurance company which in turn would be invested till the term opted by you. Post the term opted, your distribution phase will start. In the distribution phase, you have two options either ask the insurance company to start your pension/annuity or you may withdraw the money and purchase and immediate annuity or deferred annuity plans. NPS is a much better option than that of other pension plans as the level of customization is much more than that of others.
 
Mutual funds too have the same kind of plans known as retirement plans. But investment in such schemes leaves less room for customization and diversification. So it is better to create your own customized portfolio of mutual funds which would certainly suit your risk profile. You can start SIP (Systematic Investment Plan) in mutual funds with proper asset allocation based on your risk profile for your accumulation phase and then in distribution phase start an SWP (Systematic Withdrawal Plan) from the accumulated corpus on retirement.
 
Now the question remains whether to opt the pension plan route or the mutual funds route. Frankly speaking investment in NPS is also one of the better options as in recent times they have evolved as one of the better competitive product for retirement planning. NPS allows you to have maximum up to 75 per cent allocation to equity and rest to corporate debt and government securities. Even you can choose the fund managers. NPS also provides you facility of periodically re-balancing by way of certain percentage and duration or based on life stage. But there is room for improvement. Still mutual funds can provide you much more customization and options than that of NPS and even in the tax point of view, mutual funds are much more tax efficient than that of NPS or any other pension plans for that matter.