What is Monthly Pension after Commutation of Total Contributed Amount in LIC schemes?

Shailesh Kumar, Co-founder, Insurance Samadhan

Answered on December 26,2021

Dear

Each pension scheme has two components :

Accumulation part which you are referring to . Here you accumulate money to build a corpus which can be used for your old age pension . No such scheme offers you Pension . So it is a misnomer that it is giving you pension . This is only accumulation which can be done by any other saving schemes like Mutual fund , NPS etc . Rather NPS offers incremental tax benefit of Rs 50000 . Any Pension plan offered by Insurer is the worst option .
This corpus can be used to buy Pension Plan - known as Annuity Plan . There are different Annuity option and you choose one as per your requirement .
Once bought , your capital known as Purchase Price is locked and would give you regular income . You can not use the Purchase Price .
Monthly Pension would depend on the interest rate at the time of annuity purchase . Today the interest rate is 6% , hence you will get a guaranteed pension of approx 0.4 -0.5% .

Hope this clarifies

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