Saral Pension Yojana

What is Saral Pension Yojana?

The Saral Pension Yojana is a standard individual, non-linked, non-participating, immediate annuity product prefixed by the insurer's name. It offers a regular annuity to the life assured after retirement. This plan ensures a steady income and a return of your purchase price so you can continue living comfortably without compromise.

The Insurance Regulatory and Development Authority of India (IRDAI) has mandated all life insurance companies to offer Saral Pension Yojana, a standard immediate annuity product, to help customers make an informed choice. This standard product will also enhance the trust between the insured and the insurer and prevent the misselling of policies.

Top Insurers for Saral Pension Plans in India in 2024

• SBI Saral Pension Plan

• LIC Saral Pension Plan

• ICICI Pru Saral Pension Plan

• HDFC Life Saral Pension Plan

• Tata AIA Saral Pension Plan

• Kotak Saral Pension Plan

• ABSLI Saral Pension Plan

• SUD Life Saral Pension Plan

• Canara HSBC Saral Pension Plan

• PNB Saral Pension Plan

Eligibility Criteria for Saral Pension Yojana

Why Should You Buy Saral Pension Yojana?

Following are some of the benefits of investing in a Saral Pension Plan:

• The Saral Pension Yojana is easy to understand.

• The Saral Pension Yojana makes it easy for customers to make an informed choice, as all life insurance companies offer the same product.

• It does not require any medical check-ups, making it accessible to a wider range of individuals.

• Offers lifelong pension benefits, ensuring long-term financial independence.

• Standardized wordings.

Features of Saral Pension Yojana

The key features of a Saral Pension Scheme offered by various insurers are as follows:

• Guaranteed Pension for Life: The Saral Pension Plan guarantees a steady income for life, and your pension payments can begin as early as the first month after purchasing the plan.

• Two Annuity Options: This plan gives you two choices for your annuity:

  • A life annuity that returns 100% of the purchase price.

  • A joint life annuity, which returns 100% of the purchase price after the last surviving policyholder passes away.

• Single Premium: Make a single lump sum payment to invest in the annuity plan, allowing you to avoid the inconvenience of making multiple premium payments.

• Guaranteed Annuity Rate of Lifetime: The annuity rate will be locked in for life based on the plan option, your age at the time of entry, and the amount invested.

• Higher Purchase Price Benefit: By investing a larger amount in the plan, you can receive a higher pension, as the annuity increases with the purchase price.

• Return of Purchase Price: In the event of the policyholder's death, the insurance company returns 100% of the purchase price to the nominee. For joint life policies, this amount is given after both individuals pass away.

• Access to Liquidity for Medical Conditions: If diagnosed with a critical illness, you have the option to surrender the policy and receive 95% of the purchase price.

• Flexible Payout Options: You can choose how often you want to receive your pension payments—monthly, quarterly, half-yearly, or yearly—depending on what suits you best.

• Loan Against Policy: After six months, you can apply for a loan against your policy, which can be useful if you face unexpected financial needs.

• Tax Benefits: You can claim tax deductions under Section 80C, with a limit of ₹1.5 lakh per year. Additionally, the amount your nominee receives is tax-free under Section 10(10D).

Saral Pension Yojana Calculator

As per the norms of the Saral Pension Yojana calculator, one may calculate the returns by having the policyholder choose a plan according to their needs. By entering your age, the purchase price, and whether you choose a single or joint life annuity, you can quickly see how much pension you will receive. For example, the policyholder may choose a pension plan of receiving a monthly income of ₹1,000 per month or annually of ₹12,000. In addition, the policyholder is mandated to pay a one-time minimum premium of ₹2,50,000 to avail of this minimal pension. 

You can adjust various factors, like the purchase price or your age, to understand how these changes impact your pension payouts. Overall, it is a simple and user-friendly tool designed to give you immediate and clear results.

*All savings are provided by the insurer as per the IRDAI-approved insurance plan. Standard T&C Apply

*All savings are provided by the insurer as per the IRDAI approved insurance plan. Standard T&C Apply

Saral Pension Yojana Benefits

1. Death Benefit

   In the case of a single life annuity under the Saral Pension Yojana, 100% of the purchase price is offered to the nominee or legal heirs on the annuitant's death.
   In the case of a joint-life annuity under the Saral Pension Yojana, after the demise of the annuitant:

   • If the spouse survives, the spouse will continue receiving the annuity (exact amount) until their demise. Subsequently, on the spouse's demise, 100% of the purchase price will be given to the legal heir or nominee of the policy.

   • In case of the spouse's demise before the annuitant, the annuitant will continue receiving the annuity until their demise. Subsequently, on the annuitant's death, 100% of the purchase price will be given to the beneficiary or legal heir of the policy.

2. Survival Benefit

   • Single Life: Payments will be made at the end of each chosen period, whether monthly, quarterly, or yearly, and will continue for as long as the person covered under the plan is alive.

   • Joint Life: Payments will continue at the end of each selected period, as long as either the primary or secondary person covered under the plan is alive, based on the chosen payment frequency.

3. Maturity Benefit

   There is no maturity benefit under the Saral Pension Yojana since the pension is available till the policyholder is alive.

4. Loan

   • The policyholder can avail of a loan that can be assured any time after the completion of 6 months from the date of policy commencement. However, the maximum loan amount granted under the policy should be that the adequate annual interest amount payable on the loan does not exceed 50% of the annual annuity amount payable under the policy.

   • Under the joint-life option, the loan can be availed by the primary annuitant, and in case of the demise of the primary annuitant, the secondary annuitant can help with the loan.

   • The insurer will recover the loan interest from the annuity amount payable under the policy. The interest applicable to the loan amount will accrue based on the annuity payment frequency under the policy and will be due on the annuity date. However, the annuitant will be given the flexibility to repay the loan amount anytime during the timeline of the annuity payments.

5. Policy Surrender In Case of Diagnosis of Critical Illness of the Annuitant

   In case the annuitant or the spouse or children of the annuitant is diagnosed with any critical illness as specified in the policy document, the annuitant can surrender the policy anytime after six months from the date of policy commencement. The authority can revise the essential conditions from time to time as needed. On surrendering the policy, 95% of the purchase price will be paid to the annuitant, subject to the deduction of the outstanding loan amount and interest on the loan, if any. Once the surrender value is paid, the policy will be terminated.

*All savings are provided by the insurer as per the IRDAI-approved insurance plan. Standard T&C Apply

*All savings are provided by the insurer as per the IRDAI approved insurance plan. Standard T&C Apply

The Bottom Line

Saral Pension Yojana is an Immediate Annuity Plan that has been explicitly introduced to secure the financial future of individuals after retirement. The plan targets the Indian population who wants to purchase an annuity to ensure a regular flow of income after retirement. Under this standard policy, all types of life will be covered, including male, female, and transgender people.

All life insurance companies permitted to transact new business should compulsorily offer the standard immediate annuity product from April 1, 2022, at the latest. Insurers may file the product by February 28, 2022.