comparison of different pension plans with concept and definition.

1. Pension Plan
Presented By:

2. Pension Fund Regulatory and
Development Authority
 PFRDA was established by Government of
India on 23rd August, 2003.
 It acts as a regulator for the pension
sector.

3. Introduction
 Pension plans (also referred to as retirement plans)
are offered by insurance companies to help
individuals build a retirement corpus. On maturity
this corpus is invested for generating a regular
income stream, which is referred to as pension or
annuity.
 It is pension plans that provide individuals with a
regular income in their golden years.
 It will provide the financial security to pursue
unfulfilled dreams.

4. History
 Traditionally, employers provided for
employees' retirement through pension plans.
Today, many companies have switched to
defined contribution plans, requiring
employees to provide for their own
retirement needs.

5. The components to be taken into account
when calculating your retirement corpus
are:
 ~ Your current age
~ Expected age of retirement
~ Life expectancy
~ Years after retirement
~ Current earnings
~ Expected annual growth (in percentage) in income
~ Annual income at retirement age
~ Rate of return on retirement corpus (in percentage)
~ Inflation rate (percentage)
~ Inflation adjusted rate of return/Real rate of return
(in percentage)

6. How pensions work…

7. How pensions work…

8. PENSION PLANS CLASSIFICATIONS
 Immediate Annuity plans, It start paying you the
annuity right from day one once you make a lump
sum payment. It’s a simple product which is not so
much popular in India like deferred annuity plans.
 Deferred Annuity, In this a policyholder needs to
pay a regular premium for a certain number of
years. Once he/she retire, then start getting pension
income.

9. Options available to
individuals on pension plans
 Annuity payable for life: The annuitant is paid a
fixed sum at pre-decided intervals throughout his
life. The pension ceases as the annuitant dies. The
quantum of pension payable here is the highest. It
can also be known as 'life annuity' and is suitable
for someone who does not have any family
obligation to provide income after his death.

10.  Life annuity with fixed period guarantees: Also
known as guaranteed pension, this type of annuity
ensures that the pension is payable for a certain
period and thereafter as long as the annuitant is
alive. Shorter the guarantee period, higher is the
pension. The pension payable under the five-year
guaranteed option is higher than the pension
payable under 20 years.

11.  Joint life & last survivor annuity: This option
ensures that the annuity is paid till either of the
annuitant or his/her spouse is alive. Some insurers
have capped the amount at 50% payable to the
survivor, when the annuitant dies. This type of
pension is ideal when the annuitant intends to
provide for a regular income to the spouse. Joint
life pension is determined after taking into account
the age of both the annuitant and the spouse.

12.  Annuity with return of purchase price: This is an
extension of annuity payable for life. The annuitant
enjoys the pension till he dies. The pension ceases
as the annuitant dies and the purchase price is paid
to the nominee of the deceased annuitant. However,
the pension payable under this option is less than
the pension payable under the first option.

13.  Life annuity increasing at a fixed rate: This
option is also an extension of the life annuity. The
annuitant is paid a sum which is revised upwards by
a certain percentage throughout his life. For
example, the annuity is increased at a simple rate of
5% each year. This is good for those who retire
early and expect to live a long retired life and prefer
an adjustment for inflation.

15. ICICI STAR UNION HDFC Life LIC SBI Life –
Prudential Dai-ichi Pension (Pension Plus) (Lifelong
(New Dhruv Super Plus Pension Plus)
Tara)
Product type Regular Plan Unit Linked Unit-Linked Unit Linked non
participating
traditional
Minimum 6000 12000 24000 15000 7500
annual
premium(Rs)
Minimum 50000 150000 500000 100,000 50000
Cover (Rs)
Min-Max 5yrs-30yrs 10-52 years 10-65 yrs 10 yrs 5-40 yrs
Tenure(Yrs)
Min –Max 50-70 years 40-65 years 55-75 yrs 40-85 years 40-70 yrs
Vesting age(yrs)
Riders Critical Illness Accidental death & Death rider Accident &
Benefit Rider permanent
Available Accident and disability and
Sickness
Disability Benefit critical illness
Ride
Life Cover Yes Yes Yes Yes NO