Prior to the new ULIP regulations, about 30% of business came from pension products. While most insurers have avoided pension ULIPs, IDBI Federal plans to revive the dwindling pension market with a new traditional pension product
IDBI Federal Retiresurance is a guaranteed traditional pension plan designed to help customers secure their lifestyle post-retirement. Retiresurance is a good product for people looking at returns in line with rates of long-term government securities.
You know the exact amount that you will receive on your vesting date for each premium paid. But the catch is that the rate used to calculate guaranteed returns may vary each year, depending on the government securities rate declared by the Fixed Income Money Market and Derivatives Association (FIMMDA). So, the corpus you are accumulating will depend on FIMMDA rates; but the positive side is that the premium you pay will get the government securities rates without any charges.
Retiresurance is a long-term product that has an accumulation phase and a payout phase. The duration of the accumulation phase can be over 10, 15, 20 or 25 years. In the payout phase, you could draw from your retirement corpus for a regular pension.
There is a single premium as well as a regular premium option with a minimum premium payment term of three years. The single premium option has a minimum premium of Rs25,000 and it is Rs20,000 for the regular premium. There is no upper limit for investment.
If someone chooses a 25-year term and pays a premium of Rs1,00,000, the FIMMDA rate for 25-year government securities is 8.6% today. With this rate, the policyholder is guaranteed Rs5,50,000 at the end of 25 years. For the next premium that you pay the remaining policy term will be 24 years. The FIMMDA rate for 24-year government securities at that time will determine what will be your guaranteed maturity value for your second year premium and so on. At the end of the accumulation phase (25 years in this case), the policyholder has the option to take out a one-third lump sum and use the remainder to buy annuity or to buy annuity for the full corpus. The annuity rates and terms will depend on what is offered at the time of the payout phase.
According to GV Nageswara Rao, managing director and chief executive officer, IDBI Federal Life Insurance, "We have designed Retiresurance to suit the definitive needs of people post-retirement. With an increase in life expectancy, many Indians could be spending a good 20 to 25 years of their life in retirement. The product offers a guaranteed corpus for every premium paid. Moreover, if the customer continues the policy till maturity, the plan offers guaranteed loyalty additions."
Retiresurance also comes with a death benefit to ensure that the policy holder's nominee gets money which could be the higher of either the premiums paid, along with a 5% compounded interest, or the special surrender value.
Under the current tax laws, contributions by way of premiums are eligible for deduction under section 80CCC. Under section 10 (10A), the tax benefits are on any payment in commutation of pension received from the fund.
IDBI Federal plans to also come out with a single-premium pension ULIP in the near future. They have already filed for the product with the Insurance Regulatory and Development Authority. The regular-premium pension ULIP is avoided by most insurers-except LIC-as it is perceived to be risky to offer a guaranteed 4.5% per annum.
Scamsters offer Honda CR-V—an SUV—plus Rs6 lakh in emails sent from a Gmail ID, forcing the company to issue a clarification
Honda Siel Cars India has said that it has come to the company's notice that some fraudulent emails are being circulated, offering the Honda CR-V variant and Rs6 lakh. The company has clarified that Honda Siel Cars is not running any promotion scheme on chromium-vanadium alloy tool steels or on the CR-V sports utility vehicle (SUV) and it has warned people against sharing any personal data in response to such mails.
The scamsters have used Honda Siel Cars India as the name of the sender of the email which has been sent from the address email@example.com as email ID. It says, "This Email is to inform you that you have Emerge the Beneficiary of a Brand New HONDA CR-V CAR and a Cash Amount Of Six Indian Lahks (600.000.00 INR) Reply with your ID:HON3134UVM, Full name, Mobile Number and Country Claim."
Honda Siel Cars is a joint venture between Japan's Honda Motor Co Ltd and Siel Ltd, a Siddharth Shriram Group company. The company makes and sells cars under the Honda brand name in India.
The email originates from an IP address that is labelled as private in Whois database. However, it is routed through the IP address of US-based Albert Einstein College of Medicine.
Regular readers of Moneylife will recognise such messages as spam or phishing mails. For others who might have received such messages and did not know what to do, here are some guidelines.
The first thought that should come to mind is, why would Honda send an email from an ID other than their own? In this case the scamsters have chosen to use a Gmail ID. Then, we qualify the the money with rupees, or Rs, or use the new symbol before the amount, whereas the email reads "Six Indian Lahks (not even lakh/lakhs), or 600.000.00 INR. Whether this figure is 6 lakh or 600 or 6 crore, there is no way of knowing since the scamsters have put full stops anywhere and everywhere-but it appears to be the American style of million and billions.
This is yet another fraud unsuspecting people ought to guard against. In case one receives such and email, delete it immediately. You could also check the company website for further information-in this case it is HondacarIndia.com.
One last thing: Since the scamsters have used a Gmail ID, and if you have received the message on your Gmail ID, you could open the mail, click on the reverse triangle sign next to reply. Here click on 'Report phishing', so it is marked as a phishing attack and can be blocked permanently.
Although the CBT, which is headed by labour minister Mallikarjun Kharge, had decided to give a higher return of 9.5% on provident fund deposits for 2010-11, the finance ministry had expressed its opposition to the move
New Delhi: The Employees' Provident Fund Organisation (EPFO) on Tuesday stuck to its decision that about 4.71 crore subscribers of the pension fund should get 1% increase in interest on their deposits for 2010-11, pegging the rate of interest at 9.5%, reports PTI.
The Central Board of Trustees (CBT) of the EPFO also decided not to invest in stock markets.
After a two-hour meeting of the CBT, labour and employment minister Mallikarjun Kharge expressed hope the finance ministry will shortly give its concurrence to the proposal.
"I hope that after we answered all clarifications, they (finance ministry) will approve it (9.5% interest rate for 2010-11)," he told reporters on the finance ministry's reservation on 9.5% recommended by the Central Board of Trustees of the Employees Provident Fund Organisation (EPFO) in September last.
"As far as 9.5% interest (2010-11) is concerned, the finance ministry had sought some clarifications. Those clarifications have been sent by the labour secretary to the finance ministry," Mr Kharge added.
Downplaying the ongoing tussle between the two ministries over hiking the interest rates on PF deposits, Mr Kharge said there was "no tussle between the two ministries over giving 9.5% interest rate."
"These are just consultations between the two ministries. They had certain queries and when we satisfy them. They will definitely approve it," labour secretary PC Chaturvedi later explained.
Although the CBT, which is headed by the labour minister, had decided to give a higher return of 9.5% on provident fund deposits for 2010-11, the finance ministry had expressed its opposition to the move.
Following discovery of Rs1,731.57 crore in suspense account, the EPFO trustees favoured raising the rate of interest on provident fund deposits to 9.5% for its 4.71 crore subscribers from 8.5% which is being paid by EPFO since 2005-06.
The decision, however, did not find favour with the finance ministry which argued that there was no real surplus.
It said the surplus shown by the EPFO arose because all subscribers' accounts were not updated.
In a recent letter of 29th January, the labour ministry argued the EPFO is not asking for any government support for the extra returns to the salaried workers. It is their money which has earned returns.
The finance ministry's objections were based on a report by Comptroller and Auditor General which suggested that there was no surplus with the EPFO's interest suspense account.
The finance ministry has to give concurrence to the rate of return decided by CBT and notify allowing tax exemption on the entire such earnings on PF deposits.
Meanwhile, the retirement fund manager, which has a corpus of Rs5 lakh crore, said it will not invest in the stock market in absence of any guarantee on returns and safety of the money by the finance ministry.
"We don't want to invest in equities. No further decision has been taken on this and same status (of not investing PF money in stock market) would prevail," Mr Kharge said.
During the meeting, the EPFO also approved a proposal to resume investment in the scam-hit LIC Housing Finance, a subsidiary of the country's largest insurance company Life Insurance Corporation.
The CBT had suspended investment in housing finance company following disclosure of the bribe-for-loans scam in November 2010 in which top officials of the LIC Housing Finance were allegedly involved.