Pradeep Ku Panda BM Amitav Sharma BM Why Group Immediate Annuity Self Managed Trust Investments of contributions or funds can be selfmanaged by approved Trust of the Employer amp Pension can be purchased at the time of vesting from Pension Service Provider LICIGroup Annuity Sc ID: 1029804
Download Presentation The PPT/PDF document "Group Immediate Annuity" is the property of its rightful owner. Permission is granted to download and print the materials on this web site for personal, non-commercial use only, and to display it on your personal computer provided you do not modify the materials and that you retain all copyright notices contained in the materials. By downloading content from our website, you accept the terms of this agreement.
1. Group Immediate Annuity Pradeep Ku Panda, BM Amitav Sharma, BM
2. Why Group Immediate AnnuitySelf Managed Trust :- Investments of contributions or funds can be self-managed by approved Trust of the Employer & Pension can be purchased at the time of vesting from Pension Service Provider (LICI-Group Annuity Scheme ) .
3. PENSIONPension(Annuity) is a guaranteed payment life long by way of a single investment called ‘Corpus’ or ‘Purchase Price’ .Pension is thus a defined benefit where either the ‘corpus’ or the ‘Pension’ can be defined in advance.Pension is ideally purchased at the time of Retirement or Exit called ‘vesting period’ .Period of employment is the period of accumulation or otherwise called as ‘deferment period’ .Pension is determined based on various Annuity Tables. Annuity Tables are designed based on various pension benefits or otherwise called as ‘Pension Option’ or ‘Annuity Plan’ .9/7/19
4. Corpus for PensionSelf Managed Trust :- Investments of contributions or funds can be self-managed by approved Trust of the Employer & Pension can be purchased at the time of vesting from Pension Service Provider (LICI-Group Annuity Scheme ) . else2. Employer / Trust can adopt LIC’s Group Superannuation Pension Scheme whereby LIC will act as fund manager as well as pension service provider .
5. Group Annuity Plan FeaturesTrust or the Employer will be the Master Policy HolderAll the employees exiting the Organization will be provided Pension in a manner as described in the Trust Rule / Scheme Rules. Annuitant or the Pensioner will receive Annuity/Pension from the following month / quarter / half-year /year , depending upon the mode of payment opted. (only in Arrear) .Annuity/Pension amount depends on Age LBD, Annuity Option exercised, Purchase Price/Corpus and Mode of Annuity ( Mly / Qly / Hly / Yly ).
6. Pension Purchase through Self Managed Trust Pension Plans are classified into two broad categories. A. With Return of Corpus . B. Without Return of Corpus.
7. Annuity OptionsAnnuity with Return of Capital (ROC) optionAnnuity for life with Return of Capital with roc Annuity for Jt-life with 100% ann to Spouse & then roc Annuity for life without Return of Corpus optionAnnuity for life Jt-life Annuity with 50% annt to Spouse Jt-life Annuity with 100% ant to Spouse Annuity certain for 5/10/15/20 yr & life thereafter Annuity for life increasing at a simple rate of 3% pa
8. Pension Benefit Types 8Whole Life AnnuityPension till death of annuitant without any refund of purchase price after death of annuitantAnnuity for life with ROCPension till death of annuitant with refund of purchase price after death of annuitantAnnuity for 5 yrs certain & Life thereafterMinimum guaranteed period of 5 yrs pension. i.e. pension to annuitant’s nominee after his/her death, for the remaining period of 5 yrs completion in case Annuitant dies before completion of 5 yrs.If annuitant survives beyond 5 yrs, than annuity continues till he/she survives. No return of PP after death of annuitant after death beyond 5 yrs.
9. Pension Benefit Types 9Annuity for 10 yrs certain & Life thereafterBenefit pattern as described above in the 5 yrs certain type except for the fact that the minimum guaranteed period is 10 yrs instead of 5 yrs Annuity for 15 yrs certain & Life thereafterBenefit pattern as described above in the 5 yrs certain type except for the fact that the minimum guaranteed period is 15 yrs instead of 5 yrsAnnuity for 20 yrs certain & Life thereafterBenefit pattern as described above in the 5 yrs certain type except for the fact that the minimum guaranteed period is 20 yrs instead of 5 yrs. Annuity for Life with increasing @ 3% ylyWhole Life pattern with an annual increment of 3% of annuity value .
10. Pension Benefit Types 10Whole Life Annuity with 50% to SpouseWhole Life Annuity pattern with 50% of annuity value to the spouse after death of annuitant, till spouse survives. No return of PP after death of annuitant/Spouse .Whole Life Annuity with 100% to SpouseBenefit pattern as described above except for the fact that the annuity amount to Spouse will be 100% in stead of 50% .Whole Life Annuity with 100% to Spouse with ROC Whole Life Annuity pattern with 100% of annuity value to the spouse after death of annuitant, till spouse survives. Return of PP after death of Spouse to the nominee .
11. Pension Benefit Types 11Jt Life-cum-Last Survivor with 50% pension option to Spouse without ROC benefit.Whole Life Annuity pattern with 50% of annuity value to the spouse after death of annuitant, till spouse survives. No return of PP after death of annuitant/Spouse .Jt Life-cum-last Survivor with 100% pension option to Spouse without ROC Benefit.Benefit pattern as described above except for the fact that the annuity amount to Spouse will be 100% in stead of 50% .Jt Life-cum-Last Survivor with 100% pension option to Spouse with ROC benefit. Whole Life Annuity pattern with 100% of annuity value to the spouse after death of annuitant, till spouse survives. Return of PP after death of last annuitant, to the nominee .
12. Salient Features of Pension Benefits 12Pension RateDepends upon the type of pension chosen.Ranges between 5.5 to 8.5 % Highest Rate in whole life annuity .Lowest Rate in Jt Life-cum-last survivor with 100% to Spouse with ROC benefit option .Most widely used option is ‘Life Annuity With ROC’ where average pension rate is approx. 5.8 %Pension Rate is reviewed and modified from time to time. Pension depends upon the Rate applicable at the time of vesting. Pension Amount, once fixed, remains guaranteed for the whole term of the benefit type chosen.Pension Rate is also Age dependant. More the starting age, more is the pension amount.
13. Salient Features of Pension Benefits 13IncentivesIncentives for Higher Purchase Price .RebatesRebate for Higher Frequency like Qly /Hly / Yly .Any where Service in IndiaPension record can be transferred to any P&GS office in the Country and door step service can be availed
14. Cost & Benefit : Annuity – without ROC / 60 yr Age / Mly modeAnnuity TypeMly Pension for1 Lakh corpusLife Annuity647Jt.Life 50% spouse 613Jt.Life 100% spouse 563Life + 5 yr certain643Life + 10 yr certain632Life + 15 yr certain615Life + 20 yr certain595Life with 3% yly increment513
15. Higher Incentives for Higher CorpusEx : monthly mode / 60 yrs Age / without-ROC Annuity PlanAnnuity Type Lakh10 Lakh25 Lakh50 LakhLife Annuity328966251663533333Jt.Life 50% sp 311762331578131625Jt.Life 100% sp 286757831453129125Life + 20 yr cert.302961081534330750LA with 3% yly incr263353171336526792
16. Cost & Benefit Analysis - Annuity with ROCbased on corpus , Mly Mode & Age at 60 yr Annuity Type5 Lakh 10 Lakh 25 Lakh50 LakhLife + ROC226245751131323083Joint Life with 100% spouseWith ROC 233745671188523833
17. Incentives for lower frequency Mode ( Ex : 10 Lakh corpus & 60 yr Age )Annuity TypeYearly ModeMonthly ModeLife Annuity825006625Joint Life with 100% pension to Spouse694005783Life + 20 yr cert.755006108Life + ROC574004575Joint Life with 100% pension to Spouse with ROC to Nominee569004567
18. Key factors for considerationIn the scenario of falling market interest rates, the challenge is to provide a guaranteed payment life long. The financial strength of Insurer along with “Assets under Management” key factor to provide long term safety and security to the Annuitants . Most competitive Annuity Rates . Maximum range of Annuity Products . Sovereign Guarantee on Annuity Payment P&GS Office Network all over major cities9/7/19
19. Exclusive Advantage with LICWide Range of Pension Plans. Currently there are 10 types of Pension Plans. 2 variants in ROC pattern and 8 variants in without ROC(life annuity) pattern. Financial Strength, Safety , Security & Sovereign-Guarantee Insurance & Pension are Core Businesses of LIC . More than 60 years experience. 99 % of the Pensioners in India are with LIC ( other than Central & State Govt Pensioners )LIC is having network all over India. Pension Record can be transferred to local office for convenience of Pensioner.More than 30,00,000 crore AUM (Assets under Management)
20. Other BenefitsAnnuity once fixed, remains guaranteed for the rest of the life ( self & joint ) Direct Benefit TransferTax Free Commutation (1/3rd)Transfer to local P&GS OfficeGroup Annuity Rates are higher than the rates under individual annuity plans
21. Important GuidelinesEach employee will have his/her own choice of annuity optionAnnuity payment is prospective, not from a retrospective date (i.e. dating back normally not allowed. If insisted, may be allowed within the FY subject to dating back interest @ 9.5%.)Pensions are paid in arrears i.e. In Mly mode : pension starts from next month In Yly mode : pension starts from next year
22. Challenges for Self Managed Trust Funds may remain idle for the privately managed trust till the securities are bought in the prescribed pattern Further Buying and selling of securities involves additional cost which has to be borne by Trust Inadequate knowledge & experience Inadequate Fund to avail highest interest ratePension Rate for self-managed Pension(GA) is slightly less than that of Funded-Pension Scheme(GSCA)
23. Challenges for Self Managed Trust….. Matching of resources and settlement of employee benefits Time Consuming ActivityRegulation IssuesExposed to default risk in categories other that the G-SecLiquidity ProblemsBalancing the risk and return components is very challenging and needs expertise and special skills
24. DocumentationAge ProofAddress Proof/ID CopyBank account details such as Account No( Core Banking), IFSC Code, Bank Name, AddressApplication Cum Nomination FormJoint Life: Spouse age proof & Bank account information.9/7/19
25. When LIC is there , Why go else where ?Thank You