LIC Lifetime Pension : In this time of economic uncertainty, retirement planning is more important than ever before.
LIC of India, being the most trustworthy insurer in India, understands the importance of post-retirement life and offers a pension plan which makes sure that your golden years are secure financially.
This article tells you how you can get a monthly pension of ₹12,000 for 40 yrs to 80 yrs age through LIC pension plans, its features, premium and what would be the financial yield.
What are LIC’s Pension Plans?
LIC offers a variety of pension plans to address various requirements and financial objectives. These schemes operate as annuity schemes where you invest at regular intervals during your working years and it pays you back as regular pension after your retirement.
Your primary goal is to maintain financial independence and your desired lifestyle once your regular paycheck is in the rear view mirror.
Jeevan Akshay, New Jeevan Shanti and Pradhan Mantri Vaya Vandana Yojana (PMVVY) schemes are some of LIC’s popular pension solutions.
Each have unique characteristics but seek to achieve the same end-state: the provision of secure income for retirement.
Such plans are particularly useful if you want to begin planning early enough, say at 40, to help guarantee a retirement income that should see you through to 80 or even beyond.
How to Get ₹12,000 Monthly Pension
To get a monthly pension of ₹12,000 from the age of 40 to 80, a few things have to be kept in mind. The level of premium needed is based on several factors such as:
The plan chosen
Age at entry
Premium payment term
Pension commencement age
Current interest rates
So, for instance, if you are 30 years old and want to start getting a ₹12,000 monthly pension at 40, you will have to put in about ₹14-16 lakh as one-time investment in plans like Jeevan Akshay.
Or you could just choose to make a regular premium payment of around ₹12,000-15,000 a month for 10 years in schemes like New Jeevan Shanti.
Please note, these amounts could be different given the interest rate and the particular terms of the plan when you buy.
Now, keep in mind that the sooner you start, the much less you have to put in later because of “compounding.”
Advantages of LIC’s Pension Plans
Why LIC pension plan for retirement planning?LIC offers various benefits of pension plans that are good for your retirement planning :
Guaranteed Returns
LIC’s pension plans are available at guaranteed return basis as opposed to market-linked investment options. Such certainty is an asset in retirement planning, where stability is so important, particularly in unpredictable and uncertain economic times.
Tax Benefits
The contribution that is made towards these pension plans is eligible for tax deductions as per Section 80CCC of the Income Tax Act, up to ₹1.5 lakh per financial year.
This tax benefit makes your investment more financially efficient.
Flexibility in Retirement Savings Withdrawals
You can choose to receive pensions on a monthly, quarterly, half-yearly or yearly basis, as per your convenience and financial needs with Most LIC pension plans. This flexibility offers you a way to match pension income to your expenditures.
Death Benefits
Most of these have options for the nominee to get the benefits in case of your death, and they would take care of the financial security of your family even when you are not around.
Opportunities for Inflation Protection
Some plans provide an inflated annuity whereby the pension payable increases each year by a percentage of the base pension, a way to protect against inflation and to maintain the purchasing power of the benefit over time.
Example: investing at the age of 30 to get pension from 40 years of age to 80 years of age:
Take the case of Rajesh, a 30-year-old professional who wishes to purchase a monthly pension of ₹12,000 from age 40 to 80. He speaks to an LIC advisor and decides to invest in the New Jeevan Shanti policy.
At prevailing rates, Rajesh should invest around ₹15 lakh as a lumpsum, say for kids’ education and marriage. This investment will give him ₹12,000 of montly pension for 40 years starting from his age of 40 until 80.
The total pension Rajesh’s will get in the course of 40 years will be:
₹12,000 × 12 months × 40 years = ₹57,60,000
This is almost four times his initial investment of ₹15 lakh and a great illustration of the long-term impact of early pension planning.
Financial Planning Implications
Obtaining a pension plan may seem simple, but a pension requires careful financial planning:
One Time vs. Regular Contributions
Choosing between paying a high amount in one go or in monthly installments is dependent on how your financial situation looks like now.
Although, Lump sum investments are known to fetch better returns, regular premium solutions offer greater flexibility and convenience of investing.
Checking Impact of Inflation Data on Markets
A ₹12,000 pension today will seem to be adequate as of now but factoring in the inflation at 5-6% per annum, it does not have the purchase power as it ages. So it’s best to build into your target pension sum some allowance for inflation.
Additional Ideas for Investment Planning
A pension plan alone may not be enough to provide for a successful retirement plan. Look at spreading it across other investment routes, such as mutual funds, stocks or real estate to build a sturdy retirement corpus.
Health Insurance Discussion
Healthcare costs are higher as people get older. As important as pension planning therefore is, investing in a comprehensive health insurance policy becomes equally essential to safeguard your retirement corpus from unexpected health expenses.
Determining the Investment Needed
For those left curious about how much one needs to invest to get a pension of ₹12,000 per month, LIC for example offers ‘premium calculator’ on its portal, in addition to the option for ‘online consultation’. But why not as rule of thumb:
For immediate annuity plans (pension begins right after the investment):
For the same monthly pension, at the same rates, you’d need roughly ₹ 18-20 lakh anyway.
For deferred annuity plans (pension starts after a waiting period):
A person aged 30 today can invest about ₹12-15 lakh now, which can fetch ₹12,000 a month in form of pension from the age of 40.
The amount depends depending on the deferment period and interest rate.
LIC’s plans v/s Other options to compare guiActive
At the same time, though LIC pension plans provide security and assured returns, it’s better to compare them with other retirement planning options such as:
National Pension System NPS is a voluntary and long-term investment plan for retirement under PFRDA (Pension Fund Regulatory and Development Authority) from NPS Trust.
NPS provides opportunity of getting more returns as it is market linked but also have the market risk. It also offers tax deductions in terms of Section 80CCD, and this makes it a tough competitor.
Post Office Monthly Income Scheme
This government sponsored scheme is safe but generally offers lesser returns than LIC plans and with maximum investment limits that may constrain the amount of pension you would get.
Mutual Fund SWP - Systematic Withdrawal Plans
These present the possibility of more returns in exchange for some risk and are, of course, subject to market volatility. They are liquid assets, but lack the certainty associated with pension planning.
Bank Fixed Deposits
Even though they are safe, they tend to provide lower returns than LIC pension plans and do not have pension specific features.
Making the Right Choice
There are a number of factors to consider when deciding which pension plan is right for you:
Risk Appetite: In case you are someone who wants returns without any market-related risks then LIC plans can be a good fit for you.
Time Horizon For Investment: The longer your time horizon for the investment, the greater your options for strategies can be, which can include potentially higher-return, higher-risk strategies.
Liquidity: You must think if you are likely to need your investment back prior to the commencement of your pension.
Tax Effects: Consider both short term tax advantages and the long term tax consequences of paying pension benefits.
Estate Planning: Look for plans that provide benefits to the nominees during difficult times.
How to Purchase LIC Pension Plan
You can acquire an LIC pension plan through a simple process:
Check with an LIC agent to know which plan will be suitable for you
Determine the premium you should pay to meet your pension objectives
Fill in the application form with the required KYC documents
Do Medicals if required (usually for higher Sum Assured)
Pay the premium amount
Receive your policy document
Retirement planning is not just a financial decision, but a peace-of-mind, dignity investment for your golden years.
LIC pension plans provide a safety net to receive regular cash inflow of ₹12,000 per month from 40 to 80 years of age, whenever you may need those funds.
By planning ahead, knowing what you need, and making informed decisions, your retirement years are guaranteed to be spent in comfort instead of fear.
With You all the way Be it one-time investments or regular premium contributions, LIC’s pension plans are reliable means to take you to a secured tomorrow and a secured life.
The road to financial independence starts with one step – planning for your retirement and investigating the many options that are available to help you reach your financial goals.
In that case, (LB), that act becomes much more certain and focused, with LIC’s proven reputation in place and its far-flung pension products to choose from.
You know, the best time to plant a tree was 20 years ago, the second best time is today. And the best time to start planning for retirement is today, no matter how old you are or what your financial status may be.
