Nov 032015
 

Retire Smart Pension Plan from SBI Life

It is high time that you stop neglecting the pressing need for retirement savings. Most of us don’t notice that the world around us is changing rapidly and everything that happens today eventually shapes our future. For instance, there would be absolutely no reason to worry about savings for retirement if medical science did not make advancements rapidly. People now live longer and some people end up living for decades after retirement. While that’s kind of good but the happiness soon slides into horror when we look back into how people have lost their moral obligations. Children now consider their retired, aged and dependent parents as liability rather than responsibility. The longer the dependent old folks live, the bigger the liability becomes. Sounds horrifying? Okay! Now that we have your attention, let us talk about Retire Smart Pension Plan from SBI Life.

Retire Smart Pension Plan from SBI Life

What is this all about? It is about financial freedom after retirement. It is about not becoming a liability for our kids. It is about living with pride and dignity till the inevitable strikes. But we need to warn you that if you have read our previous article on Saral Pension Plan of SBI Life, you will experience some déjà vu. Why? That’s because we will keep some texts from that articles wherever we find similarity between the two plans.

Yet another warning before we move forward, the Retire Smart Pension Plan is linked to market and hence, there will be volatility. You need to be ready for accepting such volatility. In case you don’t like risks, if suggested that you avoid this plan. So, let’s begin…

The Big Promise

Irrespective of market volatility, Retire Smart will pay out 101% of all premiums ever paid by the policy holder after maturity provided the policy remains in-force or active till maturity.

Primary Features of Retire Smart Pension Plan

  1. Retire Smart promises up to 210 percent guaranteed addition in Fund Value. This boost is on total Annual Premium but subject to several conditions.
  2. From 15th year onwards, 10% of total yearly premium are paid out as guaranteed additions every single year for the rest of the policy life. These additions are paid only at the end of every year.
  3. Fund Value’s 1.5% is given out as Terminal Additions upon unexpected early death of the policy holder or upon the maturity of the policy.
  4. All investments for Retire Smart are managed through Advantage Plan for SBI Life which ensures that at least 101% of total premium paid throughout the policy life is paid out once the policy matures.
  5. If the policy holder dies before the policy matures, a guaranteed payout of 105% of total premium paid is promised by this plan.
  6. Policy holder can defer or postpone the maturity age of the policy.
  7. Policy holder may wish to pay premiums for a limited time period or can decide to pay premiums regularly.

Primary Benefits of Retire Smart Pension Plan

Benefit Description
Maturity On maturity of the policy, the policy holder in entitled to get the sum assured along with terminal additions or the policy holder gets 101% of total premium he or she has paid. The total proceeds after the policy matures can be used for following:

·         Immediate annuity can be purchased using the entire proceeds.

·         1/3rd of the entire proceeds can be withdrawn and remaining can be used for annuity purchase.

·         A deferred pension product with the provision of a single premium can be purchased using the total proceeds.

·         Accumulation period can be extended or the maturity period can be deferred in case the policy holder is below 55 years at the time of maturity. Maximum extension allowed in up to 80 years.

Tax There will be tax exemptions under Income Tax Act because payments made towards pension policies have provisions for tax exemptions but with some restrictions. 1/3rd of the policy value can be commuted once the policy is surrendered or discontinued or it matures. This 1/3rd is tax-free under Income Tax Act’s section 10(10A)(iii). The remaining amount that is used for annuity purchase will be taxed. For death benefits, there will be no taxes under Income Tax Act’s section 10(10D).
Death This is an unfortunate scenario but in case the policy holder dies, SBI Life will pay out to the nominee. The amount paid will be the greater of 105% of sum of all premiums ever paid by the policy holder or the sum of all premiums paid and terminal addition. The nominee will have the following options:

·         Take the entire proceeds as a lump sum payout.

·         Purchase an annuity using the entire proceeds or a part of the total proceeds at rates prevailing at that point in time. However, there are eligibility criteria that must be fulfilled.

Retire Smart Conditions

There are several conditions for Retire Smart Pension Plan that the potential buyers need to keep in mind. These are given in tabular format below:

Parameter Condition
Entry Age computed from last birthday Minimum Maximum
30 years. 70 years.
Exit Age computed from last birthday 40 years. 80 years.
Policy Term 10 years
15 years to 35 years
Terms for paying premium If regular premium is selected, premiums are to be paid for the whole term of the policy.
If limited premium is selected Premiums are to be paid for 5 or 8 years if the selected policy term is 10 years.
Premiums are to be paid for 5 years, 8 years, 10 years or 15 years if the selected policy term is 15 years to 35 years.
Frequency of premium Monthly.
Quarterly.
Half-yearly.
Yearly.
Minimum premium to be paid Frequency of premium Regular Limited
Monthly 2500 rupees 5000 rupees
Quarterly 7500 rupees 10000 rupees
Half-yearly 15000 rupees 20000 rupees
Yearly 24000 rupees 40000 rupees
Maximum premium to be paid No limit has been set.

Well, that’s pretty much the basics of Retire Smart Pension Plan. There are other details as well, which are too detailed to be included in this article. Kindly get in touch with your agent to get all the necessary details so that you can make informed decision.

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