Monday, August 30, 2010

Pension Plans

I was talking to my Insurance Advisor today and just realised that effective 1st Sept 2010, the rules with respect to the Pension Plans, Health Care plans and ULIP plans will change. After going into the details, the changes in the ULIP didn't bother me much. The only change that I found was that the lock-in period of your investments would be 5 years, as compared to the current 3 years. Anyways, I dont see any point investing into a ULIP just for 3 years. There are supposed to be long term plans and need to invest over a longer period of time to get better returns,

Then coming to the Pension Plans. The changes are apparently as follows. In the current Pension Plan, on maturity, one can withdraw the amount completely and use it as per one's requirements. With the new plan this wouldn't be possible. One has to go for an annuity plan, ie one will get regular pension at maturity on a monthly basis. One cannot invest the money directly from the pension into another investment plan. And a insurance rider is compulsory even though you are not really looking for it from the pension plan.
I did feel that, this plan takes off some of the freedom utilising the money at the end of maturity. Though a pension plan is primarily supposed to give you monthly returns as against a one time return.

So those who think that the current plan is good, you have another day to do so :)