BENGALURU: In India, retirement planning is often perceived to begin only in the latter years of a person's career often through making rent-accruing investments in combination with insurance. For those without a pension, there is now a new annuity insurance product on the market that can act as a pension plan.
Insurance regulator IRDAI's Saral pension plan is one such scheme that comes into effect on April 1, 2021. Under the scheme, insurers will pay the policy holders a minimum sum of Rs 1,000/ month, Rs 3,000/ quarter, and Rs 12,000/ year.
Under the Insurance Regulatory and Development Authority of India's guidelines, the maximum amount that can be paid by insurance firms is not capped. Industry experts say that like other annuity plans, the Saral Pension scheme requires people to pay a lump sum amount at the time of purchasing the policy, and this will then be followed by annuity payments.
Under the guidelines, the annuity payments are given to the insurer for life, and upon the death of the policy holder, they will be paid to the spouse or the nominee. Saral Pension, as the name suggests, is a simple pension plan that guarantees immediate payments with no dependence on markets and no cap on investments made by the policy holders.
The minimum age to begin receiving the annuity payments is 40 years and the maximum is 70 years. As far as the surrender of the policy goes, if the policy holder has paid premiums regularly, they can do so after three years, whereas for single premium payment, the policy can be surrendered after a single year. If the policy holder provides proof of critical illness, they may surrender the policy and receive the payment equal to the initial purchase.