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Sowmya Sundar

ING Vysya's pension plan is a simple accumulation product that allows you to build up a certain lumpsum, which can be used to buy annuity, on the chosen date of retirement. The advantage of this product is its simplicity and flexibility. Further, the contributions under the plan are eligible for tax benefits under Section 80 CCC.

How it works?

You can choose the amount you want to contribute, the interval at which you want to make the payments and the date on which you want to retire. You also have the flexibility of taking a contribution holiday or pay a lower amount during lean periods. Further, you can also make additional contributions to your fund.

The contributions are transferred to an Individual Pension Account (IPA). All charges are deducted from the account and the balance is invested in a Capital Guaranteed Fund.

The fund invests within specified limits (not less than 20 per cent in government securities, not less than 40 per cent in government and other approved securities and not exceeding 60 per cent of the balance in approved securities). The income from investments, gains or losses is credited to the IPA in the form of bonus interest.

Death benefits

In the event of death before retirement, the spouse can purchase an annuity if he/she is above 45 years. If the spouse is below age 45, purchase of annuity can be deferred till he/she attains that age. Encashment of up to 5 per cent of the amount outstanding in the IPA is allowed till age 45. In the absence of a spouse, the entire amount is paid to the nominee or legal heir.

Pension benefits

On the date of retirement, you have the option to withdraw up to one-third of the balance in the IPA and purchase an annuity for the rest. ING Vysya has two annuity options — annuity for life and annuity for life with return of purchase price on death of the annuitant. One has the option to take an annuity with other insurers too.

You can opt for a Term Rider. The maximum sum assured under the rider will be the lower of five times the regular contribution or Rs 1 lakh.

The premium for the Term Rider will be deducted on a one-year renewal basis from the IPA on the due date.

Pieces under this column seek to examine insurance products in detail. Readers are requested to compare products featured under this column with similar products offered by other players before arriving at an investment decision.

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