The Hindu Business Line : Pension, annuity plans may turn cheaper

Hyderabad, Dec. 17 Pension and annuity insurance products are likely to become still cheaper as the Insurance Regulatory and Development Authority (IRDA) has reduced the solvency margins for ‘other than pure term’ products.

According to a circular sent to the insurers on Wednesday, IRDA has brought the first factor (which is applicable to the mathematical reserve under each policy while calculating the solvency) for ‘other than pure term’ products on par with pure term products.

The required solvency margin under this category has been lowered from the existing 4 per cent to 3 per cent. “The revision of the first factor for general annuity and pension business — both for individual and group under non-linked business — will help life insurers to offer more affordable pension annuity products,” Mr R. Kannan, Member (Actuary), IRDA, said in the circular.

These changes would also help in widening and deepening the market, he added. The revised norms would come into effect from December 31. There is, however, no change in the factors that pertain to non-linked pure term business and linked business.

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