If we talk about discuss pensions plan then first thing comes as a top priority that post-retirement. A plan which offers regular income after your retirement when you require it more than whatever else like your family. You can tell what is waiting in the future for you as a surprise. It might be awful and great as well, If you have children and you feel that they will help you after retirement at that point, trust me, you may prove wrong. In this quick-moving world, people have given more significance to their interest rather than social interest. We are losing communism which is outstanding amongst other human highlights, which makes us sensible and dependable. Along these lines, in the event that you are great with your judgment, you need to set yourself up for future from now. Being independent on your own terms makes to you live life strongly and free.
You can’t deny this reality that planning is more essential than earning which most of us think after spending the right time. Most of them don’t know which are the best Lic pension plans to invest for their future life.
In this article, we are going to discuss, Which LIC pension plan works best for you? Jeevan Akshay VI, New Jeevan Nidhi, and PMVVY are on offer. We help you decide which one to pick.
Jeevan Akshay VI
Here, you pay a singular amount to LIC and consequently, LIC pays you a fixed sum of money for a specific timeframe.
Eg: You pay LIC an entirety of Rs 10 lakh on first January 2018. Consequently, LIC pays you Rs 60,000 every year (pre-tax) for whatever is left of your life.
Eg: You pay LIC a sum of 10 lakh on first January 2018. Consequently, LIC pays you Rs 50,000 for whatever is left of your life and the same amount after your death to your wife for the rest of her life.
You can get this money monthly, quarterly or annually, as per your choice. This kind of pension plan is called an ‘annuity.’ There are many types of annuities. The annuity composes offered by LIC under Jeevan Akshay VI are:
- Annuity for Life
This one is the simplest form of an annuity. In this option, if you pay a lump sum to LIC and in return, LIC Pays you a fixed sum of money for the rest of your life. The annuity payment stops when you die. If the total amount, you have received is less than the lump sum you paid from LIC over the years, then it was too bad. In any case, as an end-result of this component, the annuity rate in this kind of plan is higher than alternate other options on offer. The rate offered additionally increments quickly as you grow older (because statistically, you are more likely to die with advancing age).
- Ensured Annuity
The second Jeevan Akshay VI option pays you an annuity ‘sure’ for a time of 5, 10, 15 or 20 years and thereafter for the rest of your life. At the end of the day, on the off chance that you pass on inside the ‘specific’ time of 5/10/15/20 years, your beneficiaries will keep on getting the annuity for whatever is left of the ‘specific’ period. payments will stop from that point. Since this is a somewhat preferable than over ‘annuity for life’, the annuity rate (what LIC pays you) is additionally lower than the latter.
- Annuity with return of purchase price
As the name proposes, in this kind of plan, the lump sum you have paid LIC comes back to your beneficiaries upon your passing. Accordingly, in spite of the fact that the regular payments will stop on your demise, your lump sum is returned. This sounds like a significantly more attractive plan, nonetheless, take note of that the annuity rate on this alternative is much lower than its counterparts.
- Annuity for life increasing at a simple rate of 3% per annum
In this choice, the installment is made to you for your lifetime and stops after your death. Be that as it may, it has an ‘add-on.’ The regular payment is expanded at a ‘basic rate’ of 3% for every annum. Here’s an illustration:
Note: Here, your 3% increase is not ‘compounding’. Your interest is not earning interest.
- Annuity with the arrangement for companion
In this variation, LIC will pay you and your significant husband/wife after your passing for whatever is left of his/her life. This amount could be exactly the amount it paid you or half of the amount it paid you. There is additionally a third variation in which it pays your life partner a similar annuity and then returns the lump sum you have paid, to the heirs.
So what are the rates at currently being offered by LIC on Jeevan Akshay VI?<
Here’s the table of regular payments, for a lump sum of Rs 1 lakh.
|Age Last birthday||Yearly annuity amount under option|
I-Annuity forever, ii-Guaranteed Annuity (15 years), iii – Annuity with return of purchase price, iv-Annuity expanding at a straightforward rate of 3%, v – Annuity for life partner (100%), Annuity for life partner (50%), vi – Annuity formate (100%) with return of purchase price.
In the event that you purchase an annuity under Jeevan Akshay VI on the web, you get a 1% higher rate. That’s quite something!
- Tax collection
The regular payment that LIC makes to you under any of the annuity options listed above is taxed according to your slab.
New Jeevan Nidhi
This a traditional insurance policy which offers you a sum assured on your life and furthermore a return linked to the profits earned by LIC.
It likewise gives you:
Ensured additions equal to 5% of the sum assured for each completed year with the policy for the initial 5 years.
A basic reversionary bonuses and final additional bonus.
It is hard to work out the return on this policy since it is connected to the profits that LIC is offering to share with you. These rely upon the performance of the company.
On maturity, you can utilize the sum you get to purchase an annuity from an LIC in two different ways.
- The annuity can either begin immediately or
- You can invest the matured lump sum as a single premium for a policy that will mature further down the line.
- Tax collection
Insurance premiums paid towards New Jeevan Nidhi will be eligible for deduction up to Rs 1.5 lakh from Section 80 CCC. The maturity amount is also tax-free under Section 10(10)(D). Be that as it may, once you utilize the maturity amount to purchase an annuity, the annuity payments you receive will be taxable.
Pradhan mantra Vaya Vandana yojana(pmvvy)
The PMVVY in spite of the fact that showcased as a pension is basically a fixed deposit with the Life Insurance Corporation of India (LIC). It is available to individuals over the age of 60. The minimum amount you can invest in the PMVVY (month to month alternative) is Rs 1.5 lakh and the maximum amount that you can invest is Rs 7.5 lakh.
- Interest Rate
This is fixed at 8%.
The PMVVY matures after 10 years. If there should arise an occurrence of your demise in this era, the investment amount is paid to your beneficiaries. Partial exit from it is additionally permitted if there should arise an occurrence of critical illness and 98% of your deposit is paid back. On maturity, you get your entire deposit value back. You can put resources into the PMVVY here.
Contributions to the PMVVY don’t convey any tax deduction. The interest in it is also fully taxable. Interest on the PMVVY can be taken monthly, quarterly or annually. On maturity, your principal is returned to you.
Which one to choose?
The answer depends on your circumstances. Jeevan Akshay VI and PMVVY are more suited to individuals who are near retirement and are highly risk-averse. Being government and public sector-backed, they offer a high level of safety and a guaranteed return. The rates on these plans are not high but rather are looking increasingly attractive as fixed deposit rates fall across banks. The simple annuity option under Jeevan Akshay VI also offers attractive interest rates after the age of 70 (11.6%) and 80 (17.4%).
New Jeevan Nidhi is more suited to somebody who is as yet gaining and saving up for a pension than someone at the age of retirement.