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What are Unit Linked Pension Plans?

Updated On Sep 08, 2021

Unit Linked Pension Plans are market connected annuity and pension plans presented by extra security organizations. These plans are for those searching for long haul retirement plans or venture choices. After September 1, 2010, they should give an obligatory life or wellbeing cover and a base assurance of 4.5 percent. Prior, annuity plans didn't generally have a protection component to it and were principally a speculation vehicle.

Being a unit-connected arrangement, the base lock-in is five years. Prior to this, you can't give up the approach. After the September 2010 rules, safety net providers have not dispatched any such arrangement as they don't support the base assurance alternative. The protection controller intends to survey standards for this item. It might, be that as it may, not think twice about the base assurance.

How Do Unit Linked Pension Plans Work?

These plans work in two stages. They collect cash (speculation) till retirement and afterward pay 33% of the corpus to the policyholder, putting the leftover in an annuity conspiracy. The returns from the plan will pay to the resigned on a month to month/quarterly/half yearly/yearly premise.

Must read: 5 Key Mistakes to Avoid While Buying Retirement Plan Online

How Costly Are Unit Linked Pension Plans?

Charges on unit-connected annuity plans are like those on Ulips – premium-related expense (deducted from the premium in the main year or every prior year contributing), regulatory expense and asset the executives cost (up to 1.35 percent). On the off chance that you decide on a day to day existence cover, you should pay a mortality expense on your venture. At this point, there aren't numerous items on the lookout. Before September 2010, these plans were over the top expensive.

For example, ICICI Prudential's Pru Assure Pension used to charge 100% of the premium as assignment charge in the primary year. Notwithstanding, there was no such charge in the resulting years. The asset the executives expense was 0.75-1.35 percent every year, contingent upon the asset. This is a costly choice for making a retirement corpus. All things considered, speculation through common assets and going for term and wellbeing plans is a lot less expensive.

Why Are Unit Linked Pension Plans Different?

Conventional benefits plans are more secure items as they put resources into the government's proper pay instruments (like bonds and G-Secs). Yet, the profits are low. Regularly, these approaches give six percent return every year. Unit-connected plans, then again, put resources into value advertisements and can give exceptionally significant yields. Nonetheless, you bear the dangers related to business sectors.

What Are The Tax Benefits On Unit Linked Pension Plans?

Charges paid towards unit-connected annuity plans get similar treatment as other disaster protection items. These fit the bill for charge exclusions under Section 80C. On retirement, 33% of the corpus collected through the arrangement can be driven tax exempt. The sum put resources into any annuity plot, gotten as pay each year, will be burdened if the aggregate sum from annuity and different sources is more than Rs 2.5 lakh a year.


In a Unit Linked Insurance Plan (ULIP), the expenses you pay are put into the assets picked by you in the wake of deducting portion charges and charges including those for overseeing funds,policy organization and for giving protection cover are deducted from the assets by dropping certain units.

Also Read: How To Handle Retirement Investment Smartly?

Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.

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