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ICICI Prudential Pension Plan

A joint venture between ICICI Bank and Prudential Private Limited Company, ICICI Prudential Life is the leading private sector life insurance company. They began operations in December 2000 after approval was given by the Insurance Regulatory Development Authority of India (IRDAI).

For more than 20 years, ICICI Prudential has been providing high-quality products and superior services consistently. They offer term plans, savings, investment plans, and child plans. You can opt for conventional plans or ULIPs with regard to savings and investment plans. They have a wide range of products for all types of people.

What is ICICI Prudential Pension Plans?

ICICI Prudential Pension plans are designed for providing regular income for individuals on a monthly basis. The biggest concern for those who are retired is a regular cash flow as expenses continue to grow, and with customized pension plans, ICICI Prudential takes care of your cash flows post-retirement so that you can meet your expenses comfortably.

Features of ICICI Prudential Pension Plans

Here are the features of pension plans.

  • Vesting: This is the age at which you start receiving your pension, and your plan matures.
  • Immediate or Deferred: There are two types of pension plans, immediate and deferred. Under the immediate plan, there is a one-time premium paid by the policyholder, and you start receiving the annuity at the earliest due date. You start receiving annuities under the deferred annuity plan after all the premiums are paid and the corpus is created.
  • No life cover: Pension plans do not offer life cover. The policy stops once the annuitant, or in case of a joint-life annuity, both the annuitant and his or her spouse dies in case of an immediate annuity. In case of a deferred annuity, however, there is a death benefit payable to the nominee if the annuitant dies during the deferment period.
  • Commutation: A portion of the corpus which can be withdrawn in cash. This is known as commutation. You can commute up to 1/3 of the corpus, and the remaining 2/3 is used for purchasing an annuity.

Types of ICICI Prudential Pension Plans

There are two types of pension plans offered by ICICI Prudential to take care of their income needs during retirement. Let us determine the features of both plans.

ICICI Pru Easy Retirement Plan

This is a Unit Linked Insurance Plan or ULIP. This is a market-linked product, and hence, returns vary according to the market movements. Here are the features of this plan.

  • You will get the higher of the fund value or Assured Vesting benefit. The Assured Vesting Benefit is 101% of the premiums paid till the date of vesting.
  • If you are under 55 years of age, then the date of vesting is extended.
  • You have multiple choices with regard to the vesting corpus. The entire vesting corpus can be used to buy an annuity for immediate payouts. You have the choice of commutation (withdrawal) of 1/3 or the corpus in cash and use 2/3 to buy an annuity. The commuted portion is tax-free. Lastly, you could purchase a Single Premium Deferred Annuity with the entire maturity proceeds of the policy.
  • When the policyholder dies, the nominee is entitled to the higher of the fund value as on the date of the policyholder's death or 105% of all premiums paid till the date of death including any top-up premiums. The nominee has the option to either withdraw the death benefit or purchase an annuity with the proceeds.
  • You can use top-up premiums to increase the fund value. However, the top-up premium should be at least Rs. 2000 or more.
  • You can switch between the various fund options up to 4 times a year without any charges.
  • You can redirect the premium to funds other than those mentioned in the initial application through the premium redirection facility.
  • The two funds that you can choose to invest in are the Easy Retirement Balanced Fund or Easy Retirement Secure Fund.
  • You are also entitled to Pension Boosters where 5% of the average total fund value in the last 12 months is added from the 10th policy year onward and then every 5 policy years. However, you should have paid premiums for at least 5 years.
  • You have the option of either increasing or decreasing the premium payment term as per the terms and conditions of the plan.
  • You will be eligible for tax benefits under Section 80 C for the premium paid and Section 10 (10A) for the commuted portion of the corpus.
TermsMinimumMaximum
Entry Age35 years70 years
Vesting Age 45 years
Policy Term10 years30 years
Annual Premium Rs. 48,00030 years
Premium Payment TermSame as the policy term or limited pay of 5/10 yearsNo limit

Here is an example which explains how the policy works:

If you are 40 years old and paying an annual premium of Rs. 50,000 for a 20-year policy with a premium paying term of 5 years, your returns will be calculated as follows:

12345678
Premium AmountRs. 50,000
Assured benefitRs. 2,52,000
Accumulated savings @ 4%Rs. 3,65,007
Pension Booster Return @ 4%Rs. 17,250
Expected annual annuity payout @ 4%Rs. 20,916
Accumulated savings @8%Rs. 7,21,620
Pension Booster Returns @ 8%Rs. 33,549
Expected Annuity Payout @ 8%Rs. 65,092

ICICI Pru Immediate Annuity Plan

This is an immediate annuity plan where you start receiving annuity payments immediately after payment of a one-time premium. Here are the features of the plan.

  • Annuity payments will be due to you when the next immediate frequency of payment which could be monthly, quarterly, half-yearly, or annually after the single premium has been paid.
  • This plan is ideal for companies who want to invest their superannuation benefits to their employees through annuities or individuals who want regular income by investing their retirement corpus.
  • There are 12 different options which you can choose from, such as life annuity, life annuity with return of premium, annuity guaranteed for 5/10/15 years and then for life, and joint last survivor or joint last survivor with the return of purchase price.
  • You can increase the annuity amount whenever you wish, by paying additional premiums for an additional annuity.
  • Depending on the annuity amount and the annuity mode, you can avail of a premium discount offered by the company.
  • The premium paid by you for this policy is eligible for deduction under Section 80CCC of the Income Tax Act, and the commuted portion is exempt under Section 10 (10 A).
TermMaximumMaximum
Entry Age100 years
AnnuityRs. 1000 per month Rs. 12,000 per annumNo limit
Frequency of annual payoutMonthly, quarterly, half-yearly, or yearly.No limit

Why Buy ICICI Prudential Pension Plans?

The reason why buying ICICI Prudential Pension Plans is a great decision is their claim settlement ratio of 98.6% (Financial Year 2018-2019). This is an assurance for you that when required, your claim will be admitted. When buying a pension policy, this is the most important thing to keep in mind.

Claim settlement is also easy and can be done in three simple steps.

  • Step 1: Claim reporting - This can be submitted either online or any of the ICICI branches.
  • Step 2: Claim processing - Your application will be processed by the Claim care team, and you will be informed if any more documents are to be submitted.
  • Step 3: Claim settlement - After all the relevant documents are received by the insurer, your claim will be settled.

The assets under management or AUM as on 31st March 2019, was Rs. 160000 crores. These are investments made by the pension plans into various equity and debt products. The products are cost-effective, customer-centric, and come with superior customer service. The funds have performed consistently and provided value for the customers.

Not only is ICICI Prudential Life, the first private sector insurance company, but they are also the first insurance company to be listed on the BSE and the NSE.

The company has crossed the 5-million policy mark in the year 2008. The total premium also crossed the Rs. 10000 crore mark.

Enjoy the Golden Years of Your Life with the Right Pension Plan

Retirement can be the best phase of your life, provided you plan for it. You need to account for inflation and also factor in the costs related to higher medical expenses due to the possibilities of illnesses.

ICICI Prudential Pension Plans will help you achieve your retirement corpus. You need to start planning and investing early. Determine the present costs, which will continue after retirement and also add possible costs for medical expenses. When you are in the early phase of your career, you can choose the ULIP where there are two funds to invest in. The policy term of 30 years ensures that you will benefit from the power of equity. As you get closer to retirement, switch to the debt fund. This will ensure that you will reach your goal of retirement corpus. On retirement, you can commute 1/3 of the maturity amount in cash and use the rest to buy an annuity.

If you have already reached retirement age and have received a lump sum amount as superannuation benefit, you can use it for purchasing the immediate annuity plan. The annuity will be paid immediately on the nearest frequency, and you can enjoy a stable monthly income for the rest of your retired life.

So, choose wisely and invest in the pension plan that suits your needs. Enjoy the golden years of your life without compromising your standard of living.

FAQs on ICICI Prudential Pension Plan

Why Should I Buy ICICI Prudential Pension Plan?

Retirement is something you need to plan for. You would require regular income to meet your expenses when you retire. Due to inflation, the cost of living will go up when you retire. The best way to be prepared for retirement is to buy a suitable pension plan.

ICICI Prudential's Pension plans can be customized to your income requirements so that you have the required cash flow post-retirement. With their ULIP or immediate annuity plan, you can plan a comfortable retirement. You can maintain the same standard of living that you had when you were in active service.

What Is the Accumulation Phase of ICICI Prudential Pension Plan?

There are two phases in ICICI Prudential Pension Plan, one is the accumulation phase, and the other is the payout phase. The period in which you pay the premium for the chosen plan to create the retirement corpus is known as the accumulation phase. The retirement corpus created by the premiums you pay is then used to make the annuity payments. In the case of a ULIP plan, the premium payment period is up to a maximum of 30 years, and this is the accumulation phase. For the immediate annuity plan, the accumulation phase is the least as you start getting annuities after payment of the single premium.

How Do I Compute My Retirement Corpus for ICICI Prudential Pension Plan?

It is quite simple to calculate your retirement corpus for ICICI Prudential Pension plan with the online retirement calculator given on the company's website.

There are certain details that you will have to enter in the calculator to get the goal retirement corpus:

  • Your monthly expenses: You should make a detailed calculation considering the expenses that you won't incur once you retire like education expenses for your children.
  • Inflation rate: Find out the rate at which your regular monthly expenses (which will remain post-retirement) have gone up in the last 5 years. This will be the rate of inflation. You should ideally consider a 1-2% higher inflation rate considering medical expenses are likely to go up post-retirement.
  • Retirement age: The age at which you wish to retire. This will help you calculate the number of years after which you need your retirement corpus.
  • The number of years you expect to survive post-retirement: Take the average life expectancy and deduct your retirement age from this. This will give you the number of years you require as income post-retirement.

What Is the Vesting Age of ICICI Prudential Pension Plan?

The vesting age for ICICI Prudential Pension Plan is the age at which you start getting your pension. The vesting age for both ICICI Pru Easy Retirement Plan and ICICI Pru Immediate Annuity Plan are 30 years. The higher the vesting age, the higher the annuity payout.

What Are the Different Options to Pay Premium of My ICICI Prudential Pension Plan?

When it comes to options for payment of your ICICI Prudential Pension Plan premium, you can pay them monthly, quarterly, half-yearly or yearly. If you pay the premiums monthly, then the amount is low, and it is convenient to monitor. As far as the mode of payment is concerned, you can pay through:

  • Online mediums: Under this mode of payment, you can pay through net banking, credit card, debit card, e-collect, and so on.
  • Auto Debit: You can pay through this mode via direct debit, ECS, credit or debit card, or through net banking.
  • Drop Box: You can pay the premium through the drop box at the ICICI ATM drop box nearest to you.
  • ATM Debit card: Premium can also be paid via ICICI Bank Debit Card or Axis Bank debit card.
  • Cash or cheque: The premiums can also be paid at any of the ICICI Bank branches, ICICI Prudential Life branches, Axis Bank, and so on.

Why Should I Buy ICICI Prudential Pension Plan When I Already Have a Provident Fund (Pf) Account?

You should buy ICICI Prudential Pension Plan, even if you have an Employee Provident Fund Account because the amount that you receive from your Provident Fund Account alone on retirement may not be sufficient due to inflation.

ICICI has a Unit Linked Insurance Plan, which is market-linked and will provide superior returns over the long term as equity has given the highest returns in the long term in the past.

On the other hand, the Provident Fund Account essentially invests in debt products, and the average interest declared by it is 8.5%. Even though the returns are assured and tax-free, the final corpus won't be sufficient to meet the expenses post-retirement.

To meet your post-retirement expenses, you will require the amount you receive from your company as provident fund and along with that a regular monthly income from a pension plan. Apart from your regular monthly expenses, you will have increased expenses on account of medical problems in terms of checkups, medicines, and hospitalizations. To be able to make provisions for these costs, your pension plan from ICICI Prudential will supplement your Provident Fund amount to ensure that you can retire comfortably.