LIC Saral Pension (Plan No 862) – Features, Benefits and Negative Factors

LIC Saral Pension (Plan No 862) – Features, Benefits and Negative FactorsLIC Saral Pension (Plan No 862) – Features, Details, Benefits and Negative Factors

Few days back, LIC has launched Saral Pension (Plan no. 862) which is the standard annuity pension plan. This standard pension plan is issued as per guidelines from IRDA which has same terms and conditions across insurance companies. LIC already has Jeevan Akshay VII Pension plan, but LIC’s new Saral Pension plan in 2021 comes with lesser annuity options. LIC is a trusted brand and many would opt insurance and pension products as these are lifetime commitments. What is immediate annuity and how does it work? What are the features of LIC Saral Pension (Plan No 862) launched now in 2021?  Should you invest in Saral Pension scheme from LIC? In this article we would do LIC Saral Pension Plan review.

Also Read: LIC Bachat Plus offer 6.5% tax free returns – Should you buy then?

How does immediate annuity work?

Since LIC Saral Pension provides immediate annuity, one would get doubt as to how does this work exactly.

1) One needs to purchase this pension plan in a lump sum.

2) LIC would pay the pension amount based on the option chosen.

3) The pension starts immediately after the purchase of such pension plan.

4) Pension amount would depend on the terms of the pension plan.

If you want to know more about Annuity Pension Plans, you can watch this video (5 mts watch). Credit:

Features of LIC Saral Pension (Plan No 862) and various details

This Saral Pension plan is launched from 1st July 2021.

This is standard pension plan which is issued as per guidelines from IRDA where T&C is same across insurance companies.

This pension plan is non linked, non-participating, single premium, individual immediate annuity plan.

This is a single premium lump sum pension plan where one can get an immediate pension income.

The minimum purchase price would depend on the minimum annuity being opted.

There is no maximum purchase price limit.

Minimum age of entry is 40 years.

Maximum age of entry is 80 years.

The annuity is payable either monthly, quarterly, half yearly or yearly.

There are two annuity options in LIC Saral Pension annuity. One on life annuity and second is joint life annuity.

We can surrender the pension plan after 6 months based on specific terms and conditions.

LIC Saral Pension Plan unique ID: 512N342V01

Various annuity options available in LIC Saral Pension

It comes with two annuity options:

Option I: Life Annuity with Return of 100% of Purchase Price.

Option II: Joint Life Last Survivor Annuity with Return of 100% of Purchase Price on death of the last survivor.

What is LIC Saral Pension Plan calculator?

The annuity pension calculator would help you to know how much pension you can get based on the investment and respective option chosen by you.

Here are the sample yearly annuity rates for Rs 10 Lakhs purchase price. You can consider this as an example/illustration how your annuity looks like.

LIC Saral Pension - Sample Annuity Rates Calculator for Rs 10 Lakhs

What is LIC Saral Pension Plan interest rate?

LIC does not pay interest on their policies. One can expect returns between 5% to 6% from endowment / money back / pension policies.

What is minimum annuity under this scheme?

Here is the minimum annuity payable under this scheme.

1) Annuity Monthly – Rs 1,000 per month

2) Annuity Quarterly – Rs 3,000 per quarter

3) Annuity Half yearly – Rs 6,000 every 6 months

4) Annuity Yearly – Rs 12,000 per annum.

How to buy LIC Saral Pension Plan?

You can purchase this LIC pension plan either online or offline. For offline purchase, you need to approach LIC agent or LIC branch. There are certain rebates if purchased through online. You can buy LIC Saral Pension at this link by selecting the plan.

How is annuity pension income is taxed?

Any pension received is taxable as per the income tax slab applicable to individuals.

Are there any rebates in this pension plan?

There are two rebates available in this plan.

1) If you buy this pension scheme online, you will get a 2% rebate. This rebate is paid by way of increase in basic annuity rate. Example, if you buy this pension plan for Rs 10 Lakhs, 2% of it Rs 20,000 would be added on annuity price, and it would become Rs 10.2 Lacs.

2) There is incentive for higher purchase price by way of increase in annuity rate. The annuity rate incentive would be as follows:

LIC Saral Pension - High purchase price rebate

Benefits in LIC Saral Pension Plan

Here are the benefits in this pension plan from LIC.

1) Pension benefit: Pension benefits would be paid as per the following:

Saral Pension from LIC - Benefits in two options

2) Maturity benefit: There is no maturity benefit available in this pension plan.

3) Surrender Benefit: The pension plan can be surrendered any time after 6 months, if the annuitant or spouse or any of the children of the annuitant is diagnosed as suffering from any of the specified critical illnesses as Annexure, based on the documents produced to the satisfaction of the medical examiner of the Corporation.

On approval of the surrender, 95% of the Purchase Price shall be paid to the annuitant, subject to deduction of any outstanding loan amount and the loan interest, if any.

Are there any negative or hidden factors in this pension plan?

Here are some negative factors in this plan.

1) Pension plans in general come with low returns. This LIC Pension plan provide low returns of 5.1% to 5.4%. The returns are simple to calculate as the purchase price is paid back at the end of the period and the yearly pension income is ranging between Rs 51,634 to Rs 54,694 for every Rs 10 Lakhs of investment.

2) There is already an existing immediate annuity pension plan LIC Jeevan Akshay VII which has several annuity options. However, this immediate annuity pension plan with just 2 options. One can also review LIC Jeevan Akshay which has more features.

Also Read: Risk Free + Low Risk + Moderate Risk Investment options for Sr. Citizens

Should you invest in LIC Saral Pension (Plan No.862)?

Are you excited with this new LIC saral pension policy? You are the best judge if you are thinking on whether I should buy or not.

1) This LIC Pension plan come with 5.1% to 5.4%. Post tax returns + post inflation, the returns would be negative. Simple bank FDs offer higher returns compared to these returns. You should avoid this pension plan which comes with low returns.

2) The returns offered by this pension plan would not beat inflation. Investors should invest some of their retirement savings in equity or mutual funds to beat inflation.

4) If you have received your retirement benefits through various ways (EPF, PPF, accumulated corpus through various sources, etc.,), you can park your funds in any investment option that beats at least inflation. You can also check other retirement options like Senior Citizens Saving Scheme, Pradhan Mantri Vaya Vandhana Yojana Scheme, debt mutual funds, balanced mutual fund schemes, etc.

5) If you are young or in the middle age and still not planning for retirement yet, you can avoid such immediate annuity pension plans and invest in equity or mutual funds that can fetch you better returns in the medium to long term.

You are the best judge to check what is suitable to you.

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Suresh KP


  1. Not clear as usual in LIC schemes. I’m 63 years old n if I invest 10 lakhs how much will I get per month since from first month ? After my death how much my nominee get?

  2. I really wonder how one can survive with an annuity of 5.1 to 5.4% which is, negative, post inflation and post tax.
    The biggest problem with SCSS is quarterly re-setting of interest rate and with PMVYY is yearly re-setting of interest rate which, in current downward interest rate scenario, is quite risky and by the time, you complete your term, your interest earning may go down substantially from at what rate you entered.

    1. Agree Kamal. Such pension plans should be avoided. I agree that other options too have their owns positives and negative factors, but no choice

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