Complete details of SBI Life Saral Pension Plan - techandonlinesolution.info

Complete details of SBI Life Saral Pension Plan - Many investors buy pension plans so that they can get some income even after retirement. Salary will stop after retirement. But income will start from pension plan.

Which pension plan should you take?

There is no dearth of pension plans. National Pension Scheme (NPS) is an option. LIC and other insurance companies have also started many pension plans.

In this post, we will discuss SBI Life Saral Pension Plan and see whether you should buy this pension plan.

 

SBI Life Saral Pension Plan

   1. Non-Linked Participating Traditional Pension Plan (I don't like such plans)

   2 . You can also add life insurance up to Rs 50 lakh to this plan. If you add this rider, the policy will also pay out the sum assured on death during the term. But you don't need any such rider.

   3. Reversionary bonus is guaranteed for the first five years. Nothing particularly useful. 

You have to pay premium for a few years. On maturity of the policy (maturity date / vesting date) you can withdraw some money in one lump sum. You will have to buy an annuity plan (annuity) from the remaining plan. LIC Jeevan Shanti is an annuity plan. You will get lifelong pension from annuity plan.

SBI Life Saral Pension Plan: What Happens at Maturity (SBI Life Saral Pension Plan: Maturity)

At the time of maturity of the plan, you will get the following amount:

Sum Assured on Vesting/Maturity + Vested Reversionary Bonus + Terminal Bonus, if any

Reversionary Bonus is announced every year. Every year this bonus is added to your policy.

Terminal bonus is also declared every year, but it is applicable to your policy only in the year the policy matures (or the investor dies). Terminal Bonus is expressed as a percentage of Vested Reversionary Bonus.

At the time of maturity you will get 3 options:

#1 You can withdraw 1/3rd of the deposit amount (accumulated fund) in one lump sum. With the remaining amount, you will have to buy an annuity plan.

Assuming the amount including bonus etc. is Rs 10 lakh, then you can withdraw the amount up to Rs 3.33 in lump sum. An annuity plan has to be purchased with a minimum of Rs 6.67 lakh. Note that if you want, you can buy an annuity plan with the full amount.

Recently, IRDA has increased the lump sum withdrawal amount from 1/3rd to 60%. It has to be seen when it is implemented in this policy.

or

#2 You can buy a single premium deferred pension plan with the full amount.

or

#3 If you are below 55 years of age at the time of policy maturity, you can extend your policy term till the age of 70 years. If you do so, you will have to continue paying the premium.

SBI Saral Pension Plan: Tax Benefits and Taxes at the Time of Maturity (SBI Life Saral Pension Plan: Tax Benefits)

By investing in this SBI pension scheme, you will get tax benefit of up to Rs 1.5 lakh under section 80CCC. Note that this tax benefit comes within the limit of 1.5 lakh under section 80C.

There is no tax to be paid on the amount you withdraw in lump sum at the time of maturity. As written above, you can withdraw 1/3rd amount in one lump sum. You will not have to pay any tax on this amount.

With the remaining amount, you have to buy an annuity plan. You do not have to pay any tax on this amount also. But the income earned from this annuity plan will be taxed as per your tax bracket.

If you surrender the plan before the completion of the policy term, then there is a big problem. If you have availed tax benefit under section 80CC on investing in the plan, then you will have to pay tax on the amount you get.

SBI Saral Pension Plan: How will the returns be?

Let us try to guess it with the help of examples.

A 35 year old man buys Rs 10 lakh (Sum Assured on Vesting/Maturity). The policy term is 25 years. The premium will be Rs 33,443. Inclusive of GST, the premium will be Rs 34,948 in the first year and Rs 34,196 in the subsequent years.

As we saw above, your deposit amount will depend on 3 things.

    1. Sum Assured on Maturity/Vesting
    2. Vested Reversionary Bonus
    3. Terminal Bonus

We know that Sum Assured on Maturity/Vesting is Rs 10 lakh. Bonus is no longer guaranteed. But we can make an idea by looking at the bonus of the previous years. Reversionary bonuses ranged from 3.0% to 3.25%. The terminal bonus was 15%. Note Terminal Bonus is expressed as a percentage of Reversionary Bonus vested in this plan. Also you don't get terminal bonus every year. Available only in the year of maturity.

Vested Reversionary Bonus = 25 Years (Policy Term) X 10 Lakh (Sum Assured) X 3.25% = Rs 8.125 Lakh

Terminal Bonus (15%) = 15% * Rs 8.125 lakh (Vested Reversionary Bonus) = Rs 1.22 lakh

Total Deposit Fund at the time of Maturity/Vesting = Rs 10 Lakh + 8.125 Lakh + Rs 1.22 Lakh = Rs 19.34 Lakh

This is a return of 5.80%. The return is nothing special. Remember that this pension plan is a pure investment product. In PPF you will get 7.9% p.a. get |

Note that you cannot withdraw all this amount in one lump sum. You will also have to buy an annuity plan with some amount.

Is State Bank Saral Pension Plan the best pension plan?

According to me you should not invest in SBI Saral Pension Plan.

We saw returns of around 6% p.a. Was. You will get better returns in Public Provident Fund. By the way, you can also use PPF account for pension.

One thing must be kept in mind before buying any pension plan.

There are two phases of a pension plan. First some time you deposit money and after that you withdraw money. As a lump sum or annuity plan.

If you see, a pension plan is not required for regular income after retirement. How can you collect money? In Fixed Deposits, PPF or Mutual Funds. Once the money is deposited, then you can do anything. With that money you can also buy an annuity plan for regular income.

If you have to buy a pension plan only, then compare it with other pension products like LIC Jeevan Nidhi and National Pension Scheme (NPS). Only then decide.

Additional links

SBI Life Saral Pension (SBI Life Website)