I have personally gone through Pension plans of various life insurance companies and found the lowest charge ULIP. One is Bajaj Allianz Retirement Advantage SP(Single Premium) and Second is LIC Market Plus
Main Advantage of Bajaj Allianz is Online switching option through internet is there and also Unlimited switches are free. Trust me no insurance company is giving Unlimited free switches. Also policy administration charges are levied for first four policy years only.
Although Being a single premium policy for both LIC and Bajaj Allianz, you can invest with unlimited topups with just 1% allocation charges.
Charges Under Bajaj Allianz Retirement Advantage SP
! Policy Administration Charges will be chargeable for the first four
policy years only, by monthly cancellation of units. It will be 1.2% of
the single premium subject to a maximum of Rs. 600/- per annum
at the inception of the policy. The charge will inflate at 5% per
annum at every policy anniversary.
! Fund Management Charge will be 1.35% per annum of the net
assets value for Equity Growth Pension Fund, Accelerator Mid-Cap
Pension Fund and Pure Stock Pension Fund, 1.25% p.a. of the NAV
for Equity Index Pension Fund II and Asset Allocation Pension Fund
0.95% p.a. of the NAV for Bond Pension Fund and 0.95% p.a. of NAV
for Liquid Pension Fund will be charged.
! Switching Charges: Unlimited free switches would be allowed
under the plan.
! Allocation Rate: The allocation to your fund will be 98% of single
premium & 99% of top up premium.
! Surrender Charge: Nil
! Miscellaneous Charge: The miscellaneous charge would be
charged at the rate of Rs.100/- per transaction in respect of
reinstatement, alteration of premium mode, increase in regular
premium or issuance of copy of policy document.
The above charges are subject to applicable service tax.
wow! nice article...
u have any idea about Tata AIG retirement plan?
have heard Aegon Religare has come up with some good retirement plans...
hmm....
Hi Baba!
This article gave me some insight into the dynamics of Pension Plan, however, if you could put up a table carrying out some comparative study; that would be of great help for market newbies like me. Also, please let me know how much and in which instrument shall I invest monthly so that after 20 years I end up with a corpus of 2 Crores.
Hi Anshuman, please visit http://bababulls.blogspot.com/2010/02/insurance-company-lic-lic-icici.html for pension plan comparison.
You can refer to the http://bababulls.blogspot.com/2010/02/how-to-make-million-by-small.html for make a million calculator.
This pension funda is not very clear on the data. I mean how can i take the money back post retirment on a monthly basis or all at once. if i take all at onbce will there be any deductions. At the pace in which the inflation is growing is it fesible to invest in such long ter plans. you never know whether the inflation at that time be sky high for which this investemnt is not good enough. i mean i can double the money now by dabbling in share and then make at investment
Tripta... you can for sure invest your money in stocks, however there is no guarantee that you might double it fast, its also possible that you might loose even the capital as stocks are very risky.
However if you invest in pension plan by life insurer you may opt for ULIP pension plan which works exactly as mutual fund with added benefit of switching facility. Also you can opt for equities in higher rato in your portfolio which would give the equal benefit of directly investing in stocks but with lower risk.
When you invest in pension plan then there are 3 phases
1> Accumaltion phase: here you contribute to your pension fund in the form of Insurance premium or topup insurance premium.
2> Vesting: when you attain a certain age then your contribution ceases and whatever money you have contributed, plus the returns on that money becomes the total corpus of your pension fund and you decide to use it.
3> Pension: Now you have the entire corpus, then you have the option to withdraw part/entire amount as lumpsum.
Also person has the option to purchase annuity plan wherein entire/part of the fund is used to purchase annuity plan from life insurance companies which pay monthly/quarterly/half yearly/Annualy pension as decided by the investor.
One can opt for partial withdrwal as lumpsum and rest amount to be purchase annuity plan.
However as per prevailing tax laws whatever is accumalted in pension plan, only 1/3 withdrawl is tax free and on 2/3 of the amount one has to pay tax at prevailing rates.
Best option is to withdraw 1/3 of entire corpus and purchase annuity plan for 2/3 of corpus which would pay pension to the investor for life.
yeah!!! nice article. I Have one more option...retirement annuity, a pension annuity is used to provide a lifetime retirement income from the capital of a pension scheme. There are a number of options available and in the UK a pension annuity can include; income draw down, phased retirement, with profit and unit linked investment annuities. Please visit our pension annuity page for information on traditional pension annuity options or our investment annuity and impaired life pages for more information on the different types of pension annuity.
Lump Sum Annuity