[kiku007]

Thanks for this thread. It is very informative.

Originally Posted by Voodooblaster

Pradhan Mantri Vaya Vandana Yojana

The Pradhan Mantri Vaya Vandana Yojana, or PMVVY, is a social security scheme for senior citizens, implemented through the Life Insurance Corporation of India (LIC). This gives an assured minimum pension. LIC invests the corpus in the market and generates market-related returns. If such returns are lower than the guaranteed return, the differential is subsidised by the Union government. This Scheme has been extended till March 31, 2023.
The assured rate of return has been set at 7.4% for 2020-21. Thereafter, it will be reset every year.

I'm a bit confused on the assured rate of return part. If the rate of return is determined by the government every year then, is it correct to assume that the assurance is restricted to the agreed rate on a yearly basis and not for the entire 10 year policy duration?

Also, considering that the current bank 5 year FD rates for senior citizens are around 7% does this LIC scheme offer anything more than the Bank FD?

Thanks.

[alpha1]

Originally Posted by balenoed_

Just wondering if anyone has signed up for LIC's Jeevan Umang poilcy. A pension + risk coverage policy.

A relative (an agent) is persuading me to take a policy and have provided illustrations on the benefits. At first glance, it all looks good but not yet sure what the hidden conditions would be.

The payouts in LIC are comprised to two components: (1) fixed (2) bonus. Needless to say "bonus" amount is neither fixed and nor guaranteed, but these agents club it together and present a large "payback" amount making it look better than fixed deposit returns.

[warrioraks]

To anyone retiring in the next 10 years, I would recommend looking at Debt mutual funds with Target Maturity.

These funds provide predictable returns if you hold till maturity date, are taxed at 20% and provide the benefit of indexation as well.

This is a much better deal vs FD or buying government bonds directly where people in higher tax brackets have to pay 30% tax.

The current yield to maturity (pre-tax) is hovering around 7.4% which is pretty close to FD rates. Also if you pick the funds which invest in government bonds, you have practically zero default risk.

Look at these as an example - https://www.valueresearchonline.com/...rget-maturity/

[shankar.balan]

Originally Posted by 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?

Calculate the general rate of inflation and the time cost of money.

To me a higher yielding growing investment will always trump these Life Insurance schemes. Because the ROI from your investment has to be able to beat the inflation rate as well as the Tax payable on it, to represent a meaningful amount of spending money.

The thing with ‘retirement’ - its full of variables.
How long will you live?
How healthy will you be?
How much will you need?
How much will you want?
Will your lifestyle go up or will it go down?
Will you work or consult, to supplement your earnings or not?

Im not really any kind of expert on this subject at all.

But here is some basic stuff which I have learned from friends.

Someone told me that to be ‘safe’ , a person needs a corpus equating to 35 times what one spends in a year.

If one is presently spending about Rs 24 lakhs in a year, one will need Rs 8.4 to 9Cr as a corpus. This corpus itself will of course keep growing at some rate, depending on how much one withdraws and when.

I think the sensible thing to do, will be to build and amass a ‘safe’ corpus. This can mean different things to different people.

And then, when about to retire, set up a systematic withdrawal plan or monthly withdrawal based income plan, while allowing the bulk of the Corpus to continue to grow, so as to be able to keep ahead of inflation. In this way, the tax that one has to pay, is likely going to only be the Capital Gains Tax of the differential sum earned through interest and growth, on the amount originally invested.

But truth be told, the prospect of retirement is frightening. Because if the present prices of say, cars that one likes or aspires to or is used to, are anything at all to go by, and the cost of medical care being what it is, the kind of money that one will need, in order to be able to retire in peace, is incredible. The prospect therefore, is very daunting.

Would be happy to learn much more on this subject and build greater efficiencies towards achieving peace of mind.

[mohan41]

I have been informed by a Aditya Birla investment advisor that returns from guaranteed income plans like ABISL Vision LifeIncome Plan will be taxable for policies which are purchased from next financial year.

It seems this is as per the latest budgest presented by the Hon. Finance Minister. He says that if I purchase this policy (or similar guaranteed income policy) before March 31st then the returns will remain non-taxable throughout the duration of the policy.

However I could not find any specific mention of this when generally searching about it. Hence I am skeptical about the truth of the claim. Does anyone have more clarity on this?