Life Insurance Corporation of India (LIC) has introduced a new retirement solution – LIC Smart Pension Plan 2025. This is a non-participating, non-linked, individual/group savings immediate annuity plan designed to provide a secure and stable income post-retirement. Given the rising financial uncertainties and the need for a regular pension post-retirement, this plan offers various annuity options to cater to different financial needs. In this article we would provide LIC Smart Pension Plan 2025 details, key benefits, positive factors, negative factors and our conclusion as to who can invest in such pension plan no. 879.
What is LIC Smart Pension Plan 2025?
LIC officially launched the Smart Pension Plan last week in the presence of key officials from the Department of Financial Services and LIC’s top management. It is now available for purchase both offline (through agents and intermediaries) and online (via the official LIC website).
You can also check on Tips on How to Plan for Early Retirement.
Key Features of LIC Smart Pension Plan No 879
- Single Premium Immediate Annuity Plan – One-time lump sum payment with immediate annuity benefits.
- Guaranteed Annuity Rates – The annuity rates are fixed at policy inception and remain unchanged for life.
- Multiple Annuity Options – Wide range of single-life and joint-life annuities.
- Flexible Annuity Payout Modes – Monthly, quarterly, half-yearly, or annual payments.
- Liquidity & Advanced Annuity Options – Partial or full withdrawals allowed under specific conditions.
- Incentives for Existing LIC Policyholders & Nominees – Discounted annuity rates for existing customers and beneficiaries.
- Tax Benefits – Premiums paid may be eligible for tax deductions under applicable sections.
Annuity Options Available
LIC offers a variety of annuity options under this plan, classified into Single Life and Joint Life annuities. Some key options include:
For Single Life:
- Life Annuity: Fixed annuity for life, ceases on death.
- Annuity Certain Options: Guarantees payments for 5, 10, 15, or 20 years even after death.
- Increasing Annuity Options: Annual annuity increases by 3% or 6%.
- Return of Purchase Price Options: Lump sum payout to nominee after policyholder’s death.
For Joint Life:
- 50% or 100% annuity continuation to the secondary annuitant after the primary annuitant’s death.
- Annuity increasing annually by 3% or 6%.
- Return of Purchase Price to nominee after the last survivor’s death.
Eligibility Criteria
- Minimum Age at Entry: 18 years
- Maximum Age at Entry: Ranges from 65-100 years (varies by annuity option)
- Minimum Purchase Price: ₹1 lakh
- Maximum Purchase Price: No limit (subject to underwriting approval)
- Minimum Annuity: ₹1,000 per month
Various Benefits of LIC Smart Pension Plan
#1 – Survival & Death Benefits
- Survival Benefit: Regular annuity as per the chosen option.
- Death Benefit: For specific annuity options, the nominee receives the balance of the purchase price or annuitized payouts.
#2 – Maturity Benefit
- No maturity benefit is available as this is an immediate annuity plan.
#3 – Incentives and Discounts
- Existing LIC policyholders and beneficiaries of deceased policyholders receive a 0.15% annuity rate hike.
- Online purchases get a 2.5% incentive.
- NPS subscribers receive a 3% incentive.
- Higher purchase price results in a higher annuity rate.
#4 – Options for Payment of Death Benefit
If the annuity option includes a death benefit, the nominee can choose from:
- Lump sum payout.
- Annuitization of the death benefit (convert it into an annuity).
- Installment-based payout over 5, 10, or 15 years.
Positive Factors in LIC Smart Pension Plan 2025
✅ Guaranteed lifetime income – No market-linked risks.
✅ Diverse annuity choices – Tailored to different financial goals.
✅ Liquidity options available – Partial withdrawal permitted in certain cases.
✅ Special benefits for existing LIC policyholders.
✅ Available for purchase both online and offline.
✅ Can be used for NPS retirement corpus annuitization.
Negative Factors in LIC Smart Pension Plan
❌ Fixed returns – No participation in market growth or bonus additions. This pension plan does not offer any fixed interest rate
❌ No flexibility to switch annuity options once chosen.
❌ No maturity benefits – The plan only provides annuity payments.
❌ Payouts may not keep pace with inflation (except for increasing annuity options).
LIC Smart Pension Plan Calculator
If you have a question about how much pension one can get from LIC Smart Pension, you can check LIC website and fill some initial details and get accurate data at LIC Smart Pension Calculator link.
- Minimum annuity pension amount – Monthly – ₹ 1,000
- Minimum annuity pension amount – Quarterly – ₹ 3,000
- Minimum annuity pension amount – Half Yearly – ₹ 6,000
- Minimum annuity pension amount – Yearly – ₹ 12,000
- No maximum limit
- The pension calculator computes the pension amount depending on the annuity option chosen and the age of the entry.
LIC Smart Pension Plan 2025 – Who Should Consider This Plan?
You Should Consider This Plan If:
✔️ You want a stable and guaranteed pension.
✔️ You prefer fixed annuity payouts without market risk.
✔️ You are an NPS subscriber looking for an annuity option post-retirement.
✔️ You want flexible death benefit options for your family.
✔️ You are looking for a joint-life pension plan to ensure security for your spouse or dependents.
You Should Avoid This Plan If:
❌ Avoid such plan if you seek high returns (as this is a fixed annuity plan). If your goal is to get simple FD returns or higher, please avoid.
❌ Ignore, if you want liquidity (annuity plans have restrictions on withdrawals and surrendering).
❌ Avoid if you are comfortable with market-linked returns and prefer mutual funds or stocks.
Final Thoughts
The LIC Smart Pension Plan Single Premium Plan is a safe and reliable annuity plan for individuals looking for a steady retirement income. With a range of annuity options, death benefit choices, and incentives for existing policyholders, this plan offers flexibility and security. However, investors looking for higher returns may consider alternative investment options like mutual funds. Senior Citizens can also explore 8 Fixed Income Options available to them.
Before investing, carefully compare it with other available annuity products and consider inflation, financial goals, and liquidity needs.
Source Data: This article is reviewed based on LIC Smart Pension Plan Sales Brochure available on LIC website.
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I would like to take immediate annuity plan which gives best return
Have we to pay GST?
Hello Ramakrishna, As per available info, single premium pension plans attract 1.8% GST on the single premium paid.