The Life Insurance Corporation (LIC) of India has introduced New Pension Plan (NPP) – a non-participating, unit linked, individual pension plan – that may be used by individuals to build corpus by systematic and disciplined savings, which can be converted into regular income as annuity on retirement or even as early as 35 years of age.
Like the National Pension System (NPS), LIC’s New Pension Plus (NPP) also provides pension seekers various investment options, out of which an investor may select the one that suits his/her risk appetite and risk-taking capacity.
The investment options available are Pension Bond Fund, Pension Secured Fund, Pension Balanced Fund, Pension Growth Fund and Pension Discontinued Fund.
Except the Pension Disciplined Fund, the investment pattern and risk profile are given in the table below:
Pension Discontinued Fund: This fund shall be a segregated Unit Fund and shall comprise of all the Discontinued Policy Funds of all the policies offered under the Unit Linked Pension products.
The minimum entry age is 25 years and the maximum entry age is 75 years.
The minimum vesting age or the minimum age at which one may opt to get regular annuity is 35 years and the maximum vesting age is 85 years.
The minimum policy term is 10 years and maximum is 42 years.
There are two premium payment options – single premium and regular premium. For regular premium, the premium paying term will be the same as the policy term.
Minimum and Maximum Premium
Subject to policy terms and conditions, maximum three partial withdrawals between 10 per cent to 25 per cent of fund value based on premium band are allowed during the policy term for specified purposes like education, treatment, marriage, residence etc. The charges per withdrawal will be Rs 100.
In case of the unfortunate death of a policyholder during the policy term, an amount higher of the fund value and 105 per cent of the total premium paid (excluding taxes, interest on late payment and charges, if any) will be paid to the nominee.
At the time of vesting, up to 60 per cent of the fund value may be commuted and the rest will be utilised to purchase immediate or deferred annuity plans. The date of vesting may be extended by a policyholder by intimating the LIC of India before 3 months from the date of original vesting.
At least 40 per cent of the fund value will have to be utilised to purchase Annuity Plans from the LIC of India or any other IRDAI-regulated insurance company, subject to terms and conditions.