LIC Scheme: In the past few decades private jobs have commanded greater desirability. Jobs in the private sector offer competitive pay, however they do not guarantee a pension. The need for a pension is a pressing one. There are various policies and schemes which offer a good pension. One such scheme is LIC’s Saral Pension Scheme. The scheme was launched on March 1, 2023.
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LIC Saral Pension Scheme
LIC Saral Pension Scheme is a Standard Immediate Annuity plan as per the guidelines of Insurance Regulatory and Development Authority of India (IRDAI), which offers the same terms and conditions across all the life insurers. As per the scheme document the annuity rates are guaranteed at the inception of the policy and annuities are payable throughout the lifetime of Annuitant(s). The scheme document states that the scheme provides two annuity options, here are the details of the two options:
Option I
Under this option the plan offers Life Annuity with a return of 100 per cent of the Purchase Price of the scheme.
• The annuity payments shall be made in arrears for as long as the Annuitant is alive, as per the chosen mode of annuity payment.
• On death of the annuitant, the annuity payment shall cease immediately and 100% of Purchase Price shall be payable to nominee(s)/legal heirs.
Option II
Under this option the policyholder can choose Joint Life Last Survivor Annuity with Return of 100 per cent of the Purchase Price on death of the last survivor. Annuity option once chosen cannot be altered. Here are the benefits of the scheme based on the option you choose:
• The annuity amount shall be paid in arrears for as long as the Annuitant and/or spouse are alive, as per the chosen mode of annuity payment.
• On death of the last survivor, the annuity payments will cease immediately and 100% of Purchase Price shall be payable to the nominee(s)/legal heirs. It is to be noted that this option exists only for married policyholders.
Eligibility Criteria for the scheme
To be eligible to apply for the scheme, the policyholder must have a minimum age of 40 years (completed) at the time of entering the scheme. The maximum age at entry for the policyholder should be 80 years (completed). The maximum purchase price for the scheme has no limit.
The minimum annuity amount for monthly annuity is Rs 1000 per month. The minimum annuity amount for quarterly annuity is Rs 3000 per quarter. The minimum annuity amount for half yearly annuity is Rs 6000 per half year. The minimum annuity amount for annual annuity is Rs 12,000 per annum.
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Incentives Under The Plan
The scheme provides an incentive for higher purchase price by way of increase in the annuity rate, the incentive for higher purchase price by way of increase in the annuity rate is provided for three slabs of purchase price:
i) Rs 5,00,000 to Rs 9,99,999
ii) Rs 10,00,000 to Rs 24,99,999
iii) Rs 25,00,000 and above.
The scheme document states that incentive for higher purchase price depends on the purchase price slab and on mode of annuity payments. The incentive increases as the purchase price moves from the lower slab to higher slab of the purchase price. The incentive also increases with the reduction in frequency of annuity payments.
The scheme is useful for retirement planing as any individual can can buy annuity in lump sum investment, using the PF and Gratuity money accrued upon retirement. According to LIC Calculator, if a 42-year-old person buys an annuity of Rs 30 lakh, he will get Rs 12,388 every month as pension.
