Thursday, 27 January 2011

LIC Pension plus a Guaranteed Unit linked Pension Plan

LIC Pension Plus offers you 3% Guaranteed minimum rate of interest and the maximum interest is 6%. This rate of interest is allowed to gross premium and also offer the growth opportunity as a Unit Linked Insurance Plan (ULIP). The LIC Pension Plus plan is a low-premium plan which allows two investment options (funds) named debt fund and mixed fund. One is purely debt oriented for safe investors and the other one is a certain percentage of equity investment also for medium risk investors.

LIC offer a low cost structure for this pension plan also, like all other LIC plans. They charge only Rs. 360 for the whole year. And every year the charge will be increased by 3%. As per the IRDAs direction the policy guarantees a minimum return on investment on maturity.
You can pay the premium with a convenient option of monthly, quarterly, half yearly and annually. One time single premium is also allowed for those who are interested to do so. For the investment purpose you can pay additional premiums also.

The pension scheme could not withdraw fully as per the current regulations. The investor must purchase annuity for at least two third of the accumulated corpus. An investor may withdraw money and can purchase annuity after five years of lock in period.

As we mentioned at the beginning there is two types of funds in this scheme. One is low risk debt fund which is invested around 60% of the money in Government securities, government guaranteed securities or corporate debt and around 40% of the fund in Money market instruments and short term investment instruments. The second type of Fund is lower or medium risk mixed fund which invest around 45% in government securities, government guaranteed securities or corporate debt, around 40 % in money market instruments and around 15% in listed equity shares.

This is a good pension plan for private employees who do not have a pension from the employer and it assures minimum guaranteed interest and the chance of growth as a market linked insurance plan which may get an excellent return. The compulsory purchase of annuity is assures the purpose (pension) and there will be a regular income when the annuity starts. The convenient modes of premium payment are suitable for all type of income group.

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