[DigitalOne]

Originally Posted by GRAND23

All you have to do is, send mail to your company finance department regarding VPF contribution. From next month salary, you will see that your VPF amount deduction. The beauty is you got choice to increase and decrease your VPF contribution anytime. Additionally, you can check in EPFO portal for statement.

So after a bit of digging around and a HR ticket, I could start a monthly VPF contribution and it got deducted from last month salary. Should have done this earlier instead of looking for ever-elusive MF returns

[smooth]

Originally Posted by V.Narayan

Though some of the life insurance companies offer pension schemes that require investment of a fixed sum for 10 years a waiting period of a few years thereafter after which you can get an annuity income quarterly for as long as either you or your spouse is alive. Hope this helps.

I am interested to know the feedback on this scheme. Few of my known ones have invested lot of money in LIC pension scheme to get assured pension for life. It provide less Rate of interest but assured.

Any feedback or suggestions.

[V.Narayan]

Originally Posted by smooth

I am interested to know the feedback on this scheme. Few of my known ones have invested lot of money in LIC pension scheme to get assured pension for life. It provide less Rate of interest but assured.

Any feedback or suggestions.

I invested in 4 such schemes with HDFC Life one by one as my income grew. Three of the four have matured and now having run their lives of 15 or 17 years and have converted to life long annuities. I've opted for the annual payout as it gives a bit more than the monthly one. The 4th scheme is still running and will start paying out annuities in 2027. It has worked quite well for me. The annuities payout till either my spouse or I are alive. After both our deaths the principle sum will be paid to my nominees.

[smooth]

Thanks Narayan. I have started this with a small lot from LIC (Jeevan Shanti) with annual payout as immediate option and not the deferred one. I hope it works out well.

[vharihar]

Originally Posted by smooth

Thanks Narayan. I have started this with a small lot from LIC (Jeevan Shanti) with annual payout as immediate option and not the deferred one. I hope it works out well.

I read through the brochure at the following address (see below) but didn't understand how they arrived at the deferred annuity amount (1.76L per year) in the illustration in section 8 of the brochure:

https://www.licindia.in/getattachmen...chure.pdf.aspx

Any idea?

Not clear how to interpret the annuity rates in section 6 either. They are per Rs 1000 that part is clear. But are they per annum? Are they the annuity rates themselves, or the "increment" over annuity rates mentioned elsewhere?

Shouldn't there be a dependence on the duration too? And whether single or joint?

Dont bother explaining if it's tedious, I can have a sales guy explain. Buy if it's some simple misunderstanding, pls do clarify if you can.

[zensure]

Originally Posted by vharihar

I read through the brochure at the following address (see below) but didn't understand how they arrived at the deferred annuity amount (1.76L per year) in the illustration in section 8 of the brochure:

https://www.licindia.in/getattachmen...chure.pdf.aspx

Any idea?

.............

Dont bother explaining if it's tedious, I can have a sales guy explain. Buy if it's some simple misunderstanding, pls do clarify if you can.

The brochure is quite cumbersome to understand. There is simple calculator to understand this. Pls refer to this link --> https://www.insurance21.in/pension-c...hanti-850.html

BTW, this policy has been modified to have only deferred option.

Cheers

[vharihar]

The choices are somewhat mind-boggling, esp when faced with constraints like keeping funds available for kids education, marriage, etc.

I have 7 more years before retirement. I have a MF SIP going on which I plan to continue till retirement. All things considered, I'm leaning towards not subscribing to any (neither deferred nor immediate) annuity now, but rather sign up for an immediate annuity plan later when I retire using my PF/NPS corpus; and also opt for a SWP on the MF corpus then.

Hope this is an acceptable strategy.

[Gansan]

^^ I had the money intended for my son's education in PPF, which matured a year before my retirement in 2018. I kept it in bank FD for one year, till I retired. My son joined NITT the same month I retired. Therefore I knew the exact fees payable for each semester, so after paying the first semester fee, made seven FDs by back working from each semester fee, to mature exactly during the months each fee becomes payable. I did not bring it in to my post retirement investments at all.

[DigitalOne]

Originally Posted by vharihar

All things considered, I'm leaning towards not subscribing to any (neither deferred nor immediate) annuity now, but rather sign up for an immediate annuity plan later when I retire using my PF/NPS corpus; and also opt for a SWP on the MF corpus then.

Hope this is an acceptable strategy.

I am also following the same strategy. I have grown averse to investing substantial amounts into a single fund or insurance company. After the FT fiasco (lots of money stuck ), don't want to put all my eggs in single bucket.

[d3mon]

Guys, any advice on the below plans? I'm considering these as an investment option.
Any downsides or points of consideration that I should be aware of?

On investing for 5 or 10 years, these plans offer a ~6% tax-free*, guaranteed return. These returns are locked in for a very long period of 36 years, so no worries about future interest rates going up or down.

*All maturity benefits starting from year 12 onwards are tax free under some section 10DD as told by my banker. Please correct if this is not right - that'd make this plan much less attractive.

[graaja]

Originally Posted by d3mon

Guys, any advice on the below plans? I'm considering these as an investment option.
Any downsides or points of consideration that I should be aware of?

I would stay away from this policy. There is an important thumb rule in investing - "Do not mix investment and insurance".

If you see the surrender value for the first three years considering the best case scenario where you get the full non-guaranteed surrender value, it works out to 0%, 60% and 70% of the money that you have already invested. The worst case scenario is just laughable. This alone should keep you away from these policies.

You could get a pure term insurance for 1 crore for an annual premium of around 25K. Invest the rest in a mix of instruments like mutual funds, PPF etc., and you will be able to generate more returns than this scheme and at the same time not lose any money if the need arises for you to redeem.

[d3mon]

Originally Posted by graaja

I would stay away from this policy. There is an important thumb rule in investing - "Do not mix investment and insurance".

If you see the surrender value for the first three years considering the best case scenario where you get the full non-guaranteed surrender value, it works out to 0%, 60% and 70% of the money that you have already invested. The worst case scenario is just laughable. This alone should keep you away from these policies.

Thanks Graaja. I can see the surrender values are laughable.
Would your views on the policy change if I buy it for a small enough amount that it's impossible for me to need to surrender in the upcoming 5 / 10 years?

I've maxed out PPF & VPF, so those options are out. I also have some exposure to equities, so I don't really want to increase that any more. FD interest rates are going down every day, and after taxes they barely make up for a 4% interest. Hence, this option seemed interesting to me as it locks in the future interest rate for a 5/10 yr investment horizon and am not able to understand the downside.

[graaja]

Originally Posted by d3mon

Would your views on the policy change if I buy it for a small enough amount that it's impossible for me to need to surrender in the upcoming 5 / 10 years?

Under the condition that you would not surrender the policy, yes, these options yield 5.5% to 6% returns on maturity. If you are satisfied with these returns, then yes, these are definitely fine.

Personally, I would still prefer to invest in low risk debt category funds and gold that would yield better returns if held long enough - like gilt funds that invest in Government bonds or banking and PSU funds etc. I am sure we can manage 8% pre-tax returns on these instruments which post tax should still be more than the policy.

But the advantage of the policy is that they are giving you a guaranteed return removing the risk of interest variation. Just read all the fine print and make sure that they have not put in a clause somewhere that says returns are subject to prevailing interest rates

[Fx14]

Originally Posted by d3mon

Guys, any advice on the below plans? I'm considering these as an investment option.
Any downsides or points of consideration that I should be aware of?

On investing for 5 or 10 years, these plans offer a ~6% tax-free*, guaranteed return. These returns are locked in for a very long period of 36 years, so no worries about future interest rates going up or down....

If considering an investment option, stay away from mixing it with insurance. The illustration resembles ULIP type of plan for which enough negatives have been highlighted over the years. Google search will give you all you want to know.

Since you appear to be attracted to longer term fixed tax free returns, check out Tax free bonds highlighted earlier in this thread. These bonds offer returns from the first year of ownership itself, as compared to your illustration which does not project returns at all for the first 5/10 years. You are losing out on the compounding effect for all these years.

Also note that insurance premium attracts GST - it's unclear from your illustration whether the returns projected include this impact or is exclusive of it.

In case of any exigency, the surrender values projected should alert you on the amount you are losing upfront in such schemes.

[vharihar]

Just got a call from HDFC Life. He was explaining about one Sanchar Plus plan of theirs. Starting at the age of 51, invest 1L per year for 10 years, and you'll get 91K per year tax free from 11th year onwards till the age of 99.

How does this sound?