LIC Pension Plans

The Life Insurance Corporation of India(LIC) is the oldest and the most trusted life insurance provider in the insurance sector. The company enjoys a vast customer base of more than 290 million people and strives to maintain the same service and product pricing in the ever-competitive insurance market. With an array of comprehensive insurance products offered by LIC, it is a popular investment choice for most insurance buyers.

Why You Should Have Pension Plans?

Pension plans are your answer if you want to build a secure fund for retirement. Since these plans provide regular payments as an annuity, it is ensured that the money received will be used for retirement funding rather than other expenses. You can choose the vesting date, which is the date from which you become eligible to receive the pension, to coincide with the age from which you would supposedly retire. The LIC retirement plans ensure that you have a financial back and live a stress-free life after retirement.

Benefits of LIC Pension Plans

LIC pension plans offer numerous advantages to the insured policyholders. These include apparent ones such as having a regular income to some non-apparent benefits such as not worrying about healthcare costs or travel expenses. Let us look at them in more detail.

1. Regular Income

   The primary advantage of LIC pension plans is that the insured and his family receive a regular income after the LIC pension plan term. Most of the LIC pension plans provide for the premium payment well into the person's lifespan. While it may seem difficult for people who are more concerned with the now and present to think of the future as a reality, it is an undeniable fact that will come to pass. And the only way to live the lifestyle you prefer is to invest in a LIC pension plan now when you have the advantage of time in your hand to grow your pension income to levels that will help you live in comfort.

2. Hassle-Free Income

   You do not have to run from pillar to post to get your pension from the LIC pension plan. Whatever product you choose, whether it is Jeevan Akshay VI or New Jeevan Nidhi Plan, the money will be deposited in the bank account you specify, like clockwork. Unlike other pension schemes where you have to complete a lot of paperwork just to get them to release your own money, these are not the issues you will face in a LIC pension plan. Most of the minimal paperwork would have been done when buying the policy. You will have LIC's employees do most of the paperwork for you at the end of the LIC pension plan term when you start getting your pension. All you have to do is provide details of any change in address or bank account and give your surrender to the modalities of how and where you will receive your pension under the LIC pension plan.

3. A Good Alternative for People in Private Jobs

   LIC pension plans are a good way to earn pensions for people employed in the private sector. Unlike the public sector, where the central or state allocates a certain percentage of the salary towards pension, there is no such benefit in the private sector. Also, with people changing jobs and locations ever so often, it makes sense to rely on an entity that is certain to pay the pension on time. This is where LIC pension plans have the upper hand.

4. Receive Much More Than the Amount Put in, Besides The Insurance

   The guaranteed additions, such as the reversionary and final bonuses, add to the overall payout at the end of the plan. Also, all reversionary bonus percentages are declared to the public each year, so the LIC pension plan policyholders know how much bonus they will receive through simple additions. This helps to receive much better returns. Moreover, LIC provides an additional bonus amount as a loyalty payment to the customer for staying with them for the whole term of the LIC pension plan.

5. Guaranteed Payouts

   Unlike ULIPs, where the payout amount is not certain, the payment under LIC pension plans is guaranteed. The person will not only receive the payout promised, but they will also be able to plan their future finances well in advance. Knowing that the amount they will receive helps the person insured under the LIC pension plan to chalk out how much additional money they need to invest to receive a good pension amount.

6. Payment for Life

   The LIC pension plans offer payment for life. The Jeevan Akshay VI immediate annuity plan, for instance, comes with a range of options such as life annuity that is paid at a uniform rate, lifetime annuity with return of purchase price, life annuity increasing at a simple rate of 3% p.a., etc. Depending on their needs, policyholders taking the New Jeevan Nidhi Plan can opt to buy an immediate annuity from the proceeds available at maturity or a single premium deferred annuity plan.

Types of LIC Pension Plans

Currently, there are four pension plans offered by LIC. These plans are specifically designed to help prospective insurance buyers to plan their retirement smoothly. Further here, we will give some insights into these plans in detail. 

LIC Jeevan Shanti

This is a single premium payment policy where the insurance holder can choose the option of deferred or immediate annuity payment as per their suitability. For both the option of annuity, the annuity rates are determined at the policy's initiation. They are paid to the annuitant throughout their lifetime. The insurance buyer can purchase this plan either through an online or offline method.

1. Features and Benefits of LIC Jeevan Shanti

   Let's take a look at some of the salient features of the policy.

   • The insured just need to invest once and can get a guaranteed return lifelong as monthly income.
   • The plan offers nine different annuity options to choose from as per one's requirement and suitability.
   • The plan offers the option of choosing either immediate annuity or postponing it to the future date as a deferred annuity.
   • The policy offers a guaranteed additional benefit during the period of deferment.
   • After completion of 1 year of the policy, the policyholder can take a loan under the policy.

2. Eligibility Criteria of LIC Jeevan Shanti

   The eligibility criteria of LIC Jeevan Shanti are as following:

   Minimum Purchase Price*	1,50,000 subject to minimum  Annuity as specified below
   Maximum Purchase Price	No Limit
   The abovementioned minimum purchase price would be increased appropriately to meet the minimum annuity criterion as specified below.
   Minimum Age at Entry	30 years (Last Birthday)
   Maximum Age at Entry	79 years (Last Birthday)
   Minimum Vesting Age	31 years (Last Birthday)
   Maximum Vesting Age	80 years (Last Birthday)
   Minimum Deferment Period	1 year
   Maximum Deferment Period	12 years subject to  Maximum Vesting Age

    

   Annuity Mode	Monthly	Quarterly	Half-yearly	Annual
   Minimum Annuity	1000 per month	3000 per quarter	6000 per half-year	12000 per annum

   Joint Life: The joint-life annuity can be taken between any lineal ascendant / descendant of a family i.e. children, parents, grandparents or siblings, or spouse.

Pradhan Mantri Vaya Vandana Yojana

The government of India has taken this initiative. It has introduced Pradhan Mantri Vaya Vandana Yojana intending to secure the life of the individual after retirement. The scheme has been introduced with a modified pension rate under the plan and an extended period of sale from the financial year 2020-21 till 1st March 2023. As per the policy terms and conditions, the pension rate of the scheme is reviewed and decided by the Ministry of Finance every year. The current interest rate applicable on PMVVY up to August 30th, 2021, is 7.40% per annum. An individual can purchase this scheme through an online or offline method.

1. Features and Benefits of Pradhan Mantri Vaya Vandana Yojana

   • On survival of the annuitant during the policy tenure of 10 years, pension in arrears is payable to the annuitant at the end of each period as per the chosen mode.
   • In case of an unfortunate demise of the annuitant during the policy tenure of 10 years, the purchase price is refunded to the policy's beneficiary.
   • On survival of the annuitant at the end of the policy tenure of 10 years, the purchase price and the final pension installment are payable to the annuitant.
   • The policyholder can choose from the different modes of pension payment, i.e., yearly, quarterly, monthly, and half-yearly.
   • The loan facility can be availed after the completion of 3 years of the policy.
   • The scheme allows premature withdrawals during the policy tenure in specific circumstances.

2. Eligibility Criteria of Pradhan Mantri Vaya Vandana Yojana

   Let’s take a look at the eligibility criteria of the policy.

   Parameters	Details
   Policy Tenure	10 years
   Premium Paying Term	10 years
   Premium Paying Mode	Yearly, Semi-Annually, Quarterly, and Monthly.
   Entry Age	60 years
   Maturity Age	70 to 10 years after the entry age
   Grace Period	30 days
   Sum Assured	A maximum pension of ₹1,11,000/ can be availed
   Liquidity	The loan can be availed under this plan
   Pension (Minimum)	Monthly - Rs. 1,000 Quarterly - Rs. 3,000 Half-Yearly - Rs. 6,000 Yearly - Rs. 12,000
   Pension (Maximum)	Monthly - Rs. 9,500 Quarterly - Rs. 27,750 Half-Yearly - Rs. 55,500 Yearly - Rs. 1,11,000

3. Sample Pension Rates per Rs. 1,000 /- Purchase Price

   Below are the sample pension rates for Rs. 1,000/- purchase price for different modes.

   Yearly	Rs. 76.60 p.a
   Half-yearly	Rs. 75.20 p.a
   Quarterly	Rs. 74.50 p.a.
   Monthly	Rs. 74.00 p.a.

   *The pension installments are rounded off to the nearest rupee. These rates are independent.

LIC Jeevan Akshay-VII

This is an immediate annuity LIC pension plan wherein the policyholder can choose from 10 different annuity options. The annuity rate is guaranteed at the initiation of the policy, and the annuity is paid to the annuitant throughout the lifetime. The individual can purchase this policy through an online and offline method.

1. Features and Benefits of LIC Jeevan Akshay VII

   Let's take a look at the features and benefits of this LIC Pension Plan.

   • This is an immediate annuity LIC pension scheme that offers ten different annuity options to choose from.
   • The policyholder can choose to receive the annuity in yearly, half-yearly, quarterly, or monthly mode.
   • The plan offers the option of joint life immediate annuity for life with a provision for 50% of the annuity to the secondary annuitant on the demise of the primary annuitant.
   • There are multiple options of annuity payouts available under this LIC pension plan which are:
     • Life Annuity paid at a uniform rate.
     • Lifetime Annuity with Return of Purchase Price
     • Life Annuity guaranteed for 5/10/15 or 20 years and after that payable for life.
     • Life Annuity increasing at a simple rate of 3% p.a.
     • Annuity for life with 50% annuity to the spouse after the annuitant's death.
     • Annuity for life with 100% annuity to the spouse after the annuitant's death
     • Annuity for life with 100% annuity for the spouse after the annuitant's death and Return of Purchase Price after the death of the last survivor.
     • The LIC pension plan can be bought without undergoing any medical tests.

2. Eligibility Criteria of LIC Jeevan Akshay-VII

   Let’s take a look at the eligibility criteria of this LIC pension scheme.

   Minimum Purchase Price:	Rs. 1,00,000 /- subject to a minimum annuity as specified below
   *Note- The above-mentioned minimum purchase price will increase appropriately to meet minimum annuity criteria as specified below.
   Maximum Purchase Price:	No limit
   Minimum Entry Age:	30 years (completed)
   Maximum Entry Age:	85 years (completed), 100 years

3. Minimum Annuity:

   Annuity Mode	Monthly	Quarterly	Half-Yearly	Annually
   Minimum Annuity	Rs.1,000 per month	Rs.3,000 per quarter	Rs.6000 per half-year	Rs.12,000 per annum

   Joint Life: The joint-life annuity can be taken between any lineal ascendant / descendant of a family i.e. children, parents, grandparents or siblings, or spouse.

4. LIC Pension Plan – Jeevan Akshay VII: Sample Annuity Payout Rates

   The table shows the different rates of annuity payouts to individuals of different ages if the Purchase Price is assumed to be Rs.1 lakh. The annuity options are also mentioned which are numbered 1-7 as mentioned in the product features earlier.

   Age (Years)	Annuity Options
   	1	2	3	4	5	6	7
   30	7190	7160	6890	5250	7080	6970	6860
   40	7510	7440	6930	5610	7310	7120	6890
   50	8140	7950	7000	6280	7760	7420	6930
   60	9350	8790	7110	7530	8640	8030	7010
   70	12,080	9830	7260	10,220	10,560	9370	7130
   80	17,880	10,440	7480	15,890	14,600	12,340	7290

LIC Saral Bima Pension Plan

This plan is non-participating and non-linked in nature. This annuity must be purchased with one premium. After that, the annuity will begin. Annuity rates in LIC’s Saral Pension scheme are guaranteed at inception and are payable for the life of annuitants. 

1. Features and Benefits of LIC Saral Pension Plan

   • As per the press release, the minimal annuity is Rupees 12,000 yearly. 
   • The annuity mode will determine the minimal buying cost, buyer's age, and the option selected. 
   • No upper limit exists on buying the maximum purchase price. Annuity payments can be done monthly, quarterly, half-yearly, or annually. 
   • A discount is offered for purchases above Rs 5 Lakh by increasing the annuity rate.
   • This plan is available to anyone aged 40-80 years.
   • After six months, policyholders can borrow against the scheme.

How Does the LIC Pension Plan Calculator Work?

As mentioned above, the LIC pension plan calculator calculates the pension amount based on your inputs. The calculator can be used by anyone eligible to invest in a pension plan. Upon submission of the necessary information, the calculator provides the corpus accumulated at the time of retirement, with a compounded rate of interest applied. So, the LIC pension plan calculator shows you the amount invested until your retirement, interest earned throughout the scheme tenure, and finally, the total corpus generated through this scheme.

Things to Keep in Mind When Purchasing a Pension Plan

This section will discuss a few things that you need to keep in mind to ensure the LIC pension plan you buy is adequate and helps you meet your financial goals.

1. Know Your Pension Needs

   You need to make a good estimate of how much money you need in the future after you retire. Consider the fact that the real value of money decreases with time, and you need to build a sizeable corpus so you can lead the lifestyle with which you are comfortable. The corpus you need will depend on your current expenses less any expenses such as loans that you would have paid off by the time you retire and any increase in healthcare and other expenses for you to take care of your health and additional costs that are likely to arise after retirement.

2. Buy a Plan Early

   The advice that all financial experts give on the power of compounding cannot be stressed enough. Starting early with a LIC pension plan will ensure you easily build up a sizeable corpus for your retirement. Starting as early as your 20s will mean that you will have to invest less, like the small amounts you have invested will have grown to a large sum by the time you reach your retirement age. Alternatively, start investing in your 40s or 50s. You will have to pay considerably higher amounts to reach the same amount of corpus.

3. Buy a Deferred or Immediate Annuity Plan After LIC Pension Plan Matures

   Most people don't realize it, but human beings are by nature unable to comprehend and make proper use of large sums of money. You would have heard of stories of people fritter away large sums of money simply because they could not handle the amounts and neither realize the implications of their actions. The way to avoid this for your retirement corpus is by immediately investing any lump sum amount you receive at the time of vesting in an immediate or deferred annuity plan. This will ensure your retirement corpus remains safe and you are left not in a lurch when you retire. LIC's New Jeevan Nidhi plan provides this option.

4. Know the Types of Pension Plans

   There are different forms of pension plans. The first option plans like the EPF, PPF, and NPS, where you deposit a sum of money every year and receive a pension income after you retire on reaching a certain age. The second option is pension plans from asset management companies that invest in the stock market. The third option is insurance cum savings plans that build up a retirement corpus for you and, at the same time, make sure you are protected against risks. Each option has its pros and cons, and you should go with the one(s) that make sense for you. Many people prefer LIC pension plans because they offer a two-way benefit – insurance cover and assured returns.

5. The Type of Payouts is Important

   There are different types of payouts that pension plans have. Some would give you a lump sum amount of the total amount on vesting, while others would pay you an annuity for life. The ones you ought to choose should be based on the total amount you get back, the overall return percentage, and the convenience factor. For instance, the New Jeevan Nidhi LIC pension plan gives you a single corpus on vesting that you can use to purchase an immediate annuity or buy a single premium deferred pension plan for yourself. Such LIC pension plans are better as, otherwise, most people cannot choose a good annuity option for themselves and waste the money they have received as a lump sum.

6. Know the Charges /Fees

   Knowing the charges/fees will help you identify the plans that provide better returns. Not many people realize the amount of money that is wasted away through hidden charges/fees. Factoring them in will provide a more clear picture of the real returns.

Applying for a LIC Pension Plan from the Company

1. Online

   The company offers specific LIC pension plans which are available online only. The customer only needs to log into the company's website, choose the required LIC pension plan, choose the coverage, and provide the details. The premium will be determined using the filled details. The customer then needs to pay the premium online through credit card, debit card, or net banking facilities, and the policy will be issued.

2. Intermediaries

   LIC pension plans which are not available online can be purchased from agents, brokers, banks, etc., where the intermediaries help with the application process.

More Useful Resources

LIC Pension Plans FAQ's