Top LIC Pension Plans for Retirement Planning

lic pension plans

A pension plan is one of the most popular ways to save money for retirement. Pension plans offer dual benefit of pension and insurance cover. Pension plans are also known as retirement cum investment plans. In this plan you need to contribute via monthly, yearly or onetime payments and you can get steady monthly income or lump sum money post your retirement.

Pension plans help you to secure your financial future post-retirement.  There are multiple pension plans available in the market with different annuity options. It is advisable to select a retirement plan based on your retirement goals. E.g. if you want to retire early, your corpus upon maturity should be enough to support additional years. In addition to your retirement goals, you should also evaluate a plan based on annuity, return, premium payment flexibility, pension guarantee, risk coverage, and additional benefits.

LIC offers a number of pension plans. In this post, we will discuss Top LIC Pension Plans for retirement planning. In addition to that, we will also look at tips to choose the right pension plan.

Also Read – Top 5 Best LIC Policy for 2018 – 2019

What is Pension Plan?

A pension plan is a retirement insurance policy/scheme that offers regular income and bonus, post-retirement at a low premium. It is investment cum insurance plan.

Types of Pension Plan in India

Types of Pension Plans available in India are given below.

Deferred Annuity – A deferred annuity plan allows you to accumulate corpus via regular or single premium over a policy term. Pension begins at the end of term.

Immediate Annuity – Immediate annuity scheme allows only lump sum one time investment. Pension begins immediately at the end of policy term. You can get benefit of tax exemption on the premium paid.

Annuity Certain – Under annuity certain scheme pension is disbursed for a specific period. The policyholder is allowed to select the period. The nominee can claim the pension after the death of the policyholder.

With Cover Pension Plan – With cover pension plan comes with life cover component. This means that on the death of the policyholder, a lump sum amount is paid to the family members. The coverage amount in this case is not very large.

Life Annuity – Life Annuity plan is plan where pension is paid till death. If option of with spouse is selected spouse will continue to receive pension on the death of policyholder.

National Pension Scheme – NPS scheme is backed by the government of India. National pension scheme allows you to invest your money in equity and debt market based on your preference. You can withdraw 60% of money at the time of retirement and remaining money you need to use for buying annuity.

Guaranteed Period Annity Plan – Under this scheme, annuity is given to the life assured for certain period like 5,10,15 or 20 years irrespective of survival of policy holder.

Top LIC Pension Plans for Retirement Planning

LIC offers multiple pension plans such as LIC Jeevan Nidhi, LIC Jeevan Shanti, Jeevan Akshay etc. Details of LIC pension plans are given below.

LIC Jeevan Nidhi

LIC Jeevan Nidhi is launched by LIC in the year 2013. LIC’s New Jeevan Nidhi Plan is a conventional with profits pension plan which provides death cover during the deferment period and offers annuity on survival to the date of vesting.

Eligibility Conditions –

  • Minimum Basic Sum Assured :  Rs.1,00,000
  • Maximum Basic Sum Assured :  No Limit
  • Minimum Entry Age  :  20 years (nearest Birthday)
  • Maximum Entry Age :  60 years (nearest birthday)
  • Policy Term :  5 to 35 years
  • Minimum Vesting Age :  55 years (nearest birthday)
  • Maximum Vesting Age :  65 years (nearest Birthday)

Benefit on Vesting – On vesting an amount equal to the Basic Sum Assured along with accrued Guaranteed Additions, vested Simple Reversionary bonuses and Final Additional bonus, if any, shall be made available to the Life Assured. It gives two different options one is to purchase immediate annuity plan or to purchase new single Premium deferred pension product from LIC.

Benefit on Death – If policyholder expires during the first five policy years, basic sum assured along with accrued Guaranteed Addition shall be paid as lump sum or in the form of an annuity or partly in lump sum and balance in the form of an annuity to the nominee.

In case if policy holder expires after first five policy years, basic sum assured along with accrued Guaranteed Addition, Simple Reversionary and Final Additional Bonus, if any, shall be paid as lump sum or in the form of an annuity or partly in lump sum and balance in the form of an annuity to the nominee.

LIC Jeevan Shanti

LIC Jeevan Shanti is pension plan launched by LIC in the year 2018. LIC Jeevan Shanti is a Single Premium Guaranteed Pension Plan (Plan 850). It is a non-linked, non-participating, one-time investment annuity plan wherein policyholder can select from the immediate pension or deferred pension options. This means you can start receiving pension either immediately on the maturity of this policy or at deferred annuity option.

Eligibility Conditions –

Immediate Annuity

  • Minimum Age – 30 years
  • Maximum Age – 85 years
  • Min Annuity – Rs.1000 monthly, Rs.3000 Qly, Rs.6000 Half yearly and Rs.12000 yearly
  • Minimum Purchase Price – 1.5 Lakh

Deferred Annuity

  • Minimum Age – 30 years
  • Maximum Age – 79 years
  • Maximum Vesting Age – 80 years
  • Min Annuity – Rs.1000 monthly, Rs.3000 Qly, Rs.6000 Half yearly and Rs.12000 yearly
  • Minimum Purchase Price – 1.5 Lakh

There are multiple annuity options under this plan.

The annuity options under immediate annuity are given below.

  • Option A Immediate Annuity for life
  • Option B Immediate Annuity with a guaranteed period of 5 years and life thereafter
  • Option C Immediate Annuity with a guaranteed period of 10 years and life thereafter
  • Option D Immediate Annuity with a guaranteed period of 15 years and life thereafter
  • Option E Immediate Annuity with a guaranteed period of 20 years and life thereafter
  • Option F Immediate Annuity for life with return of Purchase Price
  • Option G Immediate Annuity for life increasing at a simple rate of 3% p.a.
  • Option H Joint Life Immediate Annuity for life with a provision for 50% of the annuity to the Secondary Annuitant on the death of the Primary Annuitant.
  • Option I Joint Life Immediate Annuity for life with a provision for 100% of the annuity payable as long as one of the Annuitant survives.
  • Option J Joint Life Immediate Annuity for life with a provision for 100% of the annuity payable as long as one of the Annuitant survives and return of Purchase Price on the death of the last survivor

The annuity options under deferred annuity are given below.

  • Option 1 Deferred annuity for Single Life at vesting age
  • Option 2 Deferred annuity for Joint Life at vesting age

For more information about benefit payable go through Detail Review of LIC Jeevan Shanti Plan here.

Pradhan Mantri Vaya Vandana Yojana

LIC Pradhan Mantri Vaya Vandana Yojana is pension scheme notified by the government for the senior citizen above 60 years. It is government subsidized pension scheme which shall provide an assured return of 8% per annum payable monthly (i.e equivalent to 8.30% per annum) to the pensioner surviving during the policy term of 10 years. Pradhan Mantri Vaya Vandana Yojana is a single premium payment pension plan. This pension plan offers an option to choose either the amount of pension or the Purchase Price. The last date of applying for this policy is up to 31st March, 2020.

Eligibility Conditions –

  • Minimum Entry Age – 60 Years Completed
  • Maximum Entry Age – No Limit
  • Policy Term – 10 Years
  • Maximum Purchase Price – 15 Lakh

Benefits –

Pension payment – On survival of the pensioner during the policy term, Pension shall be payable as per selection of mode.

Death benefit – On the death of the policy holder during the policy term, the purchase price shall be returned back to the nominee.

Maturity benefit – On survival of the pensioner to the end of the policy term, Purchase price and final pension instalment shall be payable.

For More information go through – LIC Pradhan Mantri Vaya Vandana Yojana Review

Tips for the selection of Right Pension Plan

Few important tips while shortlisting pension plan are given below.

  • Make estimate of future financial goals. Consider your current expenses and expected future expenses while evaluating pension scheme.
  • Evaluate all available plans, read the benefit offered by the plan post retirement and select plan accordingly.
  • Don’t invest in the pension plan for the sole purpose of saving tax.
  • Know other Investment options and select the best investment option based on safety of capital and returns.

If you think any of above LIC pension plans are suitable for requirement start investing.

Do share your queries and experience in the comment section given below.

Article by Raviraj

Raviraj is the man behind moneyexcel.com. He is graduate in finance, engaged in blogging since 6 years. Moneyexcel blog is ranked as one of the Top 10 Personal Finance Blog in India. He is not affiliated with any financial product, service provider, agent or broker. The purpose of this blog is to spread financial awareness and help people in achieving excellence for money. Please note that the views expressed on this Blog/Comments are clarifications meant for reference and guidance of the readers to explore further on the topics. These should not be construed as investment advice or legal opinion.

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