LIC’s Smart Pension Plan: Key Features, Benefits, Eligibility And More

LIC's Smart Pension Plan is a non-par, non-linked savings and immediate annuity plan. It allows entry from 18 to 100 years, depending on the annuity option.

The plan offers a range of annuity options for both single life and joint life annuities. Customers can choose an option that best fits their long-term financial planning. Here are the details, key features, benefits and eligibility for LIC’s Smart Pension Plan.  

The scheme is non-par, which means that the plan does not have any market-linked returns. The investment will be insulated from the volatility and fluctuations in the stock market.

The plan is also non-linked. This means that the plan does not have any investment component. This implies that returns are said to be guaranteed as they are not linked to any external elements.

The plan is available to both individuals and groups. This scheme primarily allows investors to save money in the long-term by making repeated investments over time.

The scheme has immediate annuity, which means that investors can start receiving an annuity income immediately after you purchase the plan.

The minimum entry age for the plan is set at 18 years. The maximum enrollment age is at 65 to 100 years. This will depend on the annuity option selected.

Policy holders are given the option to select from a range of annuity payment modes, allowing customers to customise the frequency of their income streams to work according to their individual financial requirements.

Single Life Annuity is the first annuity option which pays the scheme holder an income for the rest of their life. While the Joint Life Annuity pays an income for the rest of the life and also includes the spouse of the policy holder.

Higher annuity rates are offered to individuals who already hold LIC policies and are nominees or beneficiaries of deceased policyholders.

Under certain conditions, there is partial or full withdrawal that is available, making this a scheme with higher liquidity as well.

Based on the frequency of the payout chosen, whether that is monthly, quarterly, half-yearly, or annually, the annuity installment amount is calculated. The installment can be adjusted based on the chosen mode and not fixed.

Further, the subscribers of the National Pension System or NPS, have the option to opt for immediate annuity. This is in place to ensure a seamless transition to a steady retirement income stream.

The plan includes an option to secure financial benefits for dependents with disabilities. While if the scheme holder passes before starting to receive their annuity, the nominee will receive a lump sum payment.

If a policy holder passes before starting to receive the joint annuity, the nominee will receive a lump sum payment.

LIC's Smart Pension Plan is eligible for tax benefits under Section 80C of the Income Tax Act, 1961. This is similar to the NPS system as well.

Additionally, scheme holders can borrow up to 90% of the surrender value of the policy. Scheme holders are also guaranteed a minimum surrender value after 5 years.