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Pension Funds In India


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Pension Funds In India

  1. 1. Pension Plans & IRDA <ul><li>TEAM Members Roll No </li></ul><ul><li>Pritesh Vasan 29 </li></ul><ul><li>Pratima Mishra 89 </li></ul><ul><li>Jennifer Cardoz 60 </li></ul><ul><li>Shraddha Shirodkar 75 </li></ul><ul><li>Sunil Gupta 57 </li></ul><ul><li>Raju Athysayam 31 </li></ul>
  2. 2. Pension :- What is PENSION <ul><li>Pension is a scheme in which you are investing for your FUTURE. </li></ul><ul><li>A policy holder has to make the payments in way of Premiums. </li></ul><ul><li>Policy holder will get his accumulated amount after agreed </li></ul><ul><li>period of time. </li></ul>
  3. 3. Why one should go for Pension PENSION <ul><li>Advantages of Pension:- </li></ul><ul><li>Less Risk </li></ul><ul><li>Immediate Return </li></ul><ul><li>Works as a Group </li></ul><ul><li>Regular Return </li></ul><ul><li>Option of Withdrawals </li></ul><ul><li>Tax benefit </li></ul>
  5. 5. <ul><li>Premiums invested in bonds, govt. securities & money mkts. </li></ul><ul><li>Low Return </li></ul><ul><li>Portion of premium invested is unknown. </li></ul><ul><li>Investment arena not disclosed. </li></ul><ul><li>Certain bonus for the profits from investments. </li></ul><ul><li>Un-guaranteed bonuses. </li></ul><ul><li>Depends upon performance of the company. </li></ul>TRADITIONAL POLICIES
  6. 6. UNIT LINKED POLICIES <ul><li>Invests in the stock markets apart from bonds and G-Secs. </li></ul><ul><li>High Return </li></ul><ul><li>Risk cover and administration expenses deducted and </li></ul><ul><li>balance is invested in fund of choice. </li></ul><ul><li>Various fund options depending on risk appetite. </li></ul><ul><li>Return according to fund performance. </li></ul><ul><li>Withdrawal to meet emergencies. </li></ul><ul><li>Surplus money can be invested. </li></ul>
  7. 7. LIFE COVER OPTIONS AVAILABLE <ul><li>WITH COVER : </li></ul><ul><li>Offers a sum assured in case of a DEATH. </li></ul><ul><li>WITHOUT COVER : </li></ul><ul><li>Corpus built till date after deducting expenses and unpaid premiums is handed over to nominees. No sum assured. </li></ul>
  8. 8. <ul><li>Plans depending on Annuity startup time </li></ul><ul><li>ANNUITY = Regular pension received on investments made. Can be received </li></ul><ul><li>monthly,half-yearly,yearly, either for life of for certain number of years . </li></ul><ul><li>Immediate Annuity Plan: </li></ul><ul><li>One time lump sum premium payment. </li></ul><ul><li>Pension starts immediately within an year of premium payment. </li></ul><ul><li>E.g. LIC’s Jeevan Akshay – V, ICICI Pru Immediate Annuity. </li></ul><ul><li>Deferred Annuity Plan: </li></ul><ul><li>Premium payment option either one time or regular premiums. </li></ul><ul><li>Pension is deferred (spread) up to a time decided by the individual. </li></ul><ul><li>E.g. Bajaj Allianz – Swarna Vishranti., LIC’s Jeevan Nidhi </li></ul>
  9. 9. How do I receive annuity payments? Purchase Price = Sum assured+bonuses +additions (if any) Individual receives pension for 5,10,15,20 years, irrespective of whether alive or not. In case of death in those years- Nominees Contract closes. Major plus point: Continues receiving if alive - ANNUITY GUARANTEED FOR CERTAIN PERIODS Individual receives pension as long as he is alive ---- increases every year @3%p.a simple interest rate. - INCREASING ANNUITY Individual Spouse Individual  Spouse  Nominees JOINT LIFE/ LAST SURVIVOR Individual Individual  Nominees LIFETIME ANNUITY WITHOUT Purchase Price WITH Purchase Price Type of annuity
  10. 10. Elements of Importance for Pension Plans <ul><li>Bonus Calculation </li></ul><ul><li>Life Cover </li></ul><ul><li>Sum Assured of the Policy </li></ul><ul><li>Terminal Bonus </li></ul><ul><li>5. Compounding Returns </li></ul>
  11. 11. How to go about Pension Plans : Don’t let a miscalculation ruin your retirement STEP 1 : Estimate total annual expenses on retirement Food, Entertainment, Healthcare, Housing, Transportation, Insurance etc. STEP 2 : Estimate realistic inflation, spending pattern and life expectancy. STEP 3 : Estimate Retirement Needs considering Rate of Return & Amt. of Saving.
  12. 12. Questionnaire while taking up Pension Policy <ul><li>Can I take the notional lump sum as cash on retirement ? </li></ul><ul><li>Can I alter the basic benefits and term of my policy ? </li></ul><ul><li>How much will it cost ? </li></ul><ul><li>Am I eligible ? </li></ul><ul><li>What if I need money ? </li></ul><ul><li>What if I cannot continue paying premiums ? </li></ul><ul><li>Do I get Tax benefits ? </li></ul><ul><li>What are risk factors ? </li></ul>
  13. 13. POINTS TO BE CONSIDERED WHILE CHOOSING A PENSION PLAN <ul><li>ULIP Fund Options Available & Their Allocations </li></ul><ul><li>Generally available options are </li></ul><ul><li>Equity up to 100% </li></ul><ul><li>Growth 40-60% </li></ul><ul><li>Balanced 20-40% </li></ul><ul><li>Secured 10-20% (Also 0% at times) </li></ul><ul><li>Lower CAP of Min. Premium , if any: </li></ul><ul><li>Mainly for Single Premium Types For eg. Rs. 1 Lac for AVIVA Pension Plus policy </li></ul><ul><li>(Single Premium) </li></ul><ul><li>Premium Paying Options : </li></ul><ul><li>Monthly, Quarterly, Half-Yearly & Annually </li></ul><ul><li>Min. Sum Assurance , if any </li></ul><ul><li>Generally calculated as Min. Sum Assured=Annual Premium Amt X 0.5 X No of Annual </li></ul><ul><li>Premiums </li></ul><ul><li>Min./Max. Entry Age </li></ul><ul><li>Normally, 18-65 years </li></ul><ul><li>Min./Max. Vesting Age </li></ul><ul><li>Ranges from 45-70 years </li></ul><ul><li>Death Benefits - Such as nominee receives sum equivalent to the fund value plus accumulated bonuses as lump sum or continuous to receive pension. </li></ul>
  14. 14. <ul><li>Expenses : Comparatively Lower for Single premiums than Regular ones. Traditional plans have even lower expenses. For eg . </li></ul><ul><li>Fund Management Charges : It increases with increase in exposure to equity. </li></ul><ul><li>For eg. </li></ul>POINTS TO BE CONSIDERED WHILE CHOOSING A PENSION PLAN Traditional Unit Linked Unit Linked Product Type 10% 1 st yr. 3% 2 nd yr Hence. 20% 1 st yr. 7.5% 2 nd yr. 4% 3 rd Hence. 8% One Time Initial Year Charges Regular Regular Single Premiums Best Years Life Time Super Pension Life Link Super Pension Product Name ING Vysya ICICI ICICI Insurance Co. 0.75 0 Debt 1.25 20-40 Balanced 1.0 10-20 Secure 1.25 40-60 Growth 1.5 0 Protector 2.25 0-40 Balancer Equity Maximiser Fund Type 1.5 2.25 FMC (% p.a.) 90-100 75-100 Equity Exposure (%) New Future Perfect Life Time Super Pension Product Name ING Vysya ICICI Insurance Co.
  15. 15. <ul><li>Top-Ups Options </li></ul><ul><li>Many Times Companies put a min. Top-Up constraint </li></ul><ul><li>For Eg. HDFC Pension Plus Rs. 5000 </li></ul><ul><li>Birla Sun-Life Flexi Secure Life Rs. 10000 </li></ul><ul><li>Switching Charges </li></ul><ul><li>Companies levy charges for switching funds as per the customers directions. </li></ul><ul><li>Switching is free for a specified number of times in an year beyond which charges are </li></ul><ul><li>applicable. </li></ul><ul><li>For Eg. HDFC Pension Plus: 24 free switches in an year & Rs. 100 for further switches. </li></ul><ul><li> KOTAK Retirement Income Plan: 4 switches free & Rs. 500 for each further switch. </li></ul><ul><li>Surrender charges & Withdrawals </li></ul><ul><li>Surrendering is allowed only after completion of three policy years. The charges </li></ul><ul><li>depend on numbers of completed policy years. More the number of completed policy </li></ul><ul><li>years less will be the charge. Deducted from the funds as a %’age of fund value. </li></ul><ul><li>Normally, </li></ul><ul><li>2-3% during 4 th year </li></ul><ul><li>1.5-2% during 5 th year </li></ul><ul><li>1% during 6 th year </li></ul><ul><li>0% after 7 th year </li></ul>POINTS TO BE CONSIDERED WHILE CHOOSING A PENSION PLAN
  16. 16. INSURANCE REGULATORY & DEVELOPMENT AUTHORITY <ul><li>A national agency of the Government of India, based in Hyderabad . </li></ul><ul><li>Formed by an act of Indian Parliament known as IRDA Act 1999 . </li></ul><ul><li>Mission of IRDA as stated in the act is &quot; to protect the interests of the policyholders, </li></ul><ul><ul><li>to regulate, promote and ensure orderly growth of the insurance industry and for </li></ul></ul><ul><ul><li>matters connected therewith or incidental thereto .“ </li></ul></ul><ul><li>Has created a training college called IIRM - Institute of Insurance & Risk Management. </li></ul><ul><li>Mandates statutory training and retraining for license and renewal of Brokers and </li></ul><ul><li>Agents as intermediaries </li></ul><ul><li>The Authority is a ten member team consisting of     (a)    a Chairman;     (b)    five whole-time members;     (c)    four part-time members, (all appointed by the Govt. of India) </li></ul>