" Plan for a comfortable retirement. "

Pension/Retirement Plans

The most popular scheme under the Pension/Retirement plan is the Annuity Scheme.

What is an annuity plan?

An Annuity plan is a pension plan sold by Insurers (Life Insurance Companies), to meet your retirement needs. You make payment as a single lump sum (a single large amount), or a series of smaller payments, over a period of time till a vesting age (your retirement age).

On maturity of the policy (say at your retirement age), you get a pension regularly. This may be monthly, half yearly (every 6 months) or yearly (every year).The pension paid is for as long as you live or for a fixed number of years.

Why invest in Pension/Retirement Plans
A Good Retirement

A Good Retirement

You have a good retired life, as these plans help you save for retirement. You save and accumulate money in your working years.

Sufficient Pension

Sufficient Pension

The money you accumulate in your working years, ensures lifelong pension. You lead a good life, right till the end.

Tax Benefits

Tax Benefits

You enjoy tax benefits when you invest your money in financial products, which save for retirement and pension.

Compounding Benefits

Compounding Benefits

The money you invest in retirement and pension products, give compounding benefits with time.

Types of annuity plans

Immediate annuity plans

You have an immediate annuity plan, where you pay a lump sum (a single large amount), to the Insurer. The annuity plan begins the pension payments a month or a year after you have purchased this policy.

Deferred annuity plans

In a deferred annuity plan you have to collect sufficient money (Build a corpus), called the accumulation phase to purchase an annuity plan.

On maturity of the deferred annuity plan (vesting age/retirement age), you have the option of commutation (you take 1/3rd of the amount as a lump sum) and the remaining 2/3rd is invested in an annuity.

Payout of an annuity plan

Life annuity plan

You could choose a life annuity without return of purchase price, for pension payments after your vesting age (retirement age). This is also called a life annuity plan.

You get pension payments as long as you (policy holder), is alive. After the policy holders death, no money (pension) is paid to the nominee.

Life annuity with return of purchase price

In a life annuity with return of purchase price, you get pension payments for as long as you (policyholder), is alive. After the policyholders death, the nominee gets back the purchase price of the annuity, which is (sum assured + guaranteed additions+ accrued bonus).

Annuity Plans with guaranteed time periods

In an annuity guaranteed for certain periods, you get pension payments for 5, 10 or 15 years depending on the policy, irrespective of whether you survive this term or not. If you (policy holder), die within the term, the pension is paid to your nominee.

Joint life last survivor annuity with 50% pension for spouse

On the death of you (the policyholder), your spouse gets 50% of the pension amounts you used to get, until her death.

Joint life last survivor annuity with 100% pension for spouse

On the death of you (the policyholder), your spouse gets 100% of the pension amounts you used to get, until her death.

How is an annuity plan taxed?

You get a deduction under Section 80C and Section 80 CCC combined up to INR 1.5 Lakhs per year, from your taxable salary, on the payment made towards the annuity policy.

The 1/3rd of the amount you get as a lump sum in a deferred annuity plan is tax free under Section 10(10A).

The annuity amount (pension you receive) from your immediate or deferred annuity after vesting (retirement age), is added to your taxable salary and taxed as per the income tax slab you fall under.

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