You may be able to keep yourself away from traditional insurance products or unit-linked insurance plans, but you may not be able to avoid annuity plans, especially if you have invested in a pension product. On maturity of a pension product, one-third of your ‘commuted’ or redeemed corpus is tax-free, while the remaining two-thirds has to be invested in an annuity, if you do not want to pay tax on it. Similarly, if you are investing in National Pension System (NPS), you will have to buy annuity of up to 40% of your corpus. Annuity is supposed to secure your future with guaranteed returns for life, but 3%-7% interest per annum, which is taxable, just does not make it attractive, as our Cover Story points out. Also, regulation forces you to buy annuity from the same insurer who sold you the pension product. The insurer is able to lock you up for lifetime even if annuity rates are lower than the competitors’. In a companion piece, R Balakrishnan discusses the alternatives to annuities and, points out what would be a ‘tolerable’ option if you do have to choose an annuity.
After 12 years, the Supreme Court has ruled that Ramesh Gelli, the promoter of the infamous Global Trust Bank, the Bank’s executive director, Sridhar Subashri, and others, were public servants under the Prevention of Corruption Act (PCA) and are liable to be tried under its stringent provisions. The case pertains to what is known as the Ketan Parekh scam. But will the government actually use PCA for cases like Kingfisher, Bhushan Steels, Winsome Diamonds, etc, asks Sucheta, in her Crosshairs column. In her Different Strokes column, Sucheta narrates how far removed the prime concerns of Securities and Exchange Board of India are from the interests of investors who continue to be wary of the stock market.
Moneylife Smart Savers will conduct its fourth Investor Club workshop on 16th April. Do not miss this first-ever opportunity to hear Dr Vijay Malik, a popular writer on stocks. He will explain how to assess the management of a company by using data that is freely available. To register, visit goo.gl/FIzOuU