HDFC Life Pension Super Plus Plan – Review

by Manikaran Singal on December 9, 2012


HDFC Life has launched a new pension plan with name “HDFC Life pension Super Plus” which adheres to the new guidelines of IRDA on pension Plans. Last year in November 2011 IRDA announced new guidelines on pension plans and w.e.f Jan’12 all life insurance companies were asked to withdraw their existing pension products if they are not complying with the new guidelines.

Some of the Highlights of those guidelines are mentioned below:

Assured benefit: At the time of taking the policy, every company has to disclose to the customer a non-zero rate of return on the premiums paid or an absolute amount which he will receive at the vesting age.

Death Benefit: In the event of death, company has to pay back all the premiums paid by the customer along with the guaranteed rate of return as disclosed to the nominee.

Pension benefits: At the time of vesting, the pension has to be compulsorily provided by the same insurer who’s offered the pension plan. This is done to reduce the burden on LIC which is currently catering 90% of all pensions and thus risky for a company and its customer.

Surrender/Vesting: At the time of Surrender or vesting the policyholder should be given option to commute 1/3rd value and for the balance he should be offered with compulsorily annuity. Alternatively policyholder can go with annuity for 100% fund value. This annuity should be at the Pension annuity rate as per the latest approval of authority.

Features of HDFC Life Super plus pension Plan

Actually HDFC has launched 2 new pension plans – one is with regular premium option and other is with a single premium option. The single premium product has been launched with name “HDFC Life single premium pension super”. Feature wise these products are almost similar. Following table will take you to the features.

Other Features of HDFC Life Super Plus pension Plan

Policy Discontinuation/Surrender

If you discontinue paying the premium or request for surrender before completion of 5 years:

Fund value less discontinuation charges will be parked in a discontinued policy fund and will earn a minimum specified guaranteed return as specified by IRDA. The current guaranteed rate is the rate of saving bank accounts of State bank of India. 0.50% will be charged on this discontinued Policy fund.

No discontinuance charges will be levied on Policy surrendered after completion of 5 policy years and also on single premium policy.

The Discontinuation Charges has been standardised by IRDA for all ULIP policies.

Policy Proceeds:

You have the option to take the maturity or surrender benefit in the following manner

  1. Take up to 1/3rd of the benefit as lump sum tax free amount and Rest has to be converted into pension/annuity through the immediate annuity plan of HDFC.
  2. You may also utilise the whole amount in purchasing annuity from HDFC life.

Should you invest in HDFC life Super Plus pension Plan?

The new IRDA guidelines on the pension plans have surely made these as cost effective products as compared to their previous versions. The compulsory buying of annuity has on one hand taken back the flexibility of withdrawal but on the other is asking for only serious investors who are actually investing for pension. Now no seller can pitch you a pension plan as an Investment product of which you can withdraw after the stipulated period. But before investing, you should be able to differentiate between Retirement Plan and pension Plan. You cannot decide on entering in such products when you are not financially planned. A proper financial plan can’t be designed just by keeping one goal in mind. So time is to brace up , understand your financials, decide on your goals , have a holistic view of your requirements and then work onto a financial/pension plan by keeping in mind  other Cost effective (NPS) and tax efficient investment options (Mutual funds/PPF) available in the market.

After that figure out whether you should buy HDFC life Super Plus pension plan or not. The decision is completely financial.

Manikaran Singal

Founder and Chief Financial Planner at Good Moneying Financial Solutions
He’s MBA ( Finance) gold medalist, a CERTIFIED FINANCIAL PLANNER and SEBI Registered Investment adviser. An ex banker , having a decade long experience in financial services industry he manages clients across the globe. He’s an active member of Financial Planners’ Guild India ( An association of practicing SEBI registered Investment advisers). He's very passionate in the financial planning space and with a view to spread financial literacy among masses he writes blog articles and also contributes and quoted in various media publications like Money control, Indian express, Business Bhaskar, Dainik Bhaskar, Money mantra magazine etc. He also delivers training on Various personal finance topics to various corporate houses. You may get in touch with him at info@goodmoneying.com

{ 7 comments… read them below or add one }

Rahul December 11, 2012 at 4:49 am

Thanks Manikaran for the review. I was just about to call HDFC executive to understand this product..but your review has done the job. So what is your view should an investor do?

Reply

Manikaran Singal December 13, 2012 at 8:52 am

You r most welcome rahul.
As i wrote in the article…buying or not buying a plan completely depends on how planned you are. If you have arranged for your basic requirement and are in process of doing retirement planning then you may consider such products. But still in my view NPS is a better option as compared to this..due to its low cost structure and multiple fund management options.

Reply

Hidayat Hazarika March 24, 2013 at 6:22 pm

Dear Sir

Please check the Fund performance of both the instruments.

Regards

Reply

Sachin December 11, 2012 at 4:50 am

Is there any other company also which has pension products as per the new guidelines?

Reply

Manikaran Singal December 13, 2012 at 8:50 am

may be lic has some plan…but i guess it is not in ULIP. In private sector HDFC is the only one which’s come up with new plan as per new guidelibes

Reply

Amit February 2, 2013 at 12:03 pm

What are the major difference between Jivan Nidhi, HDFC Pension Plan and NPS? Which, according to you has upper hand?

Reply

Manikaran Singal February 5, 2013 at 12:26 pm

HDFC plan is a ULIP , LIC new jeevan nidhi is an endowment, and NPS is much flexible than both these…if i have to select among these 3 only than i would go with NPS. NPS is much cost effective and gives option to switch between 6 fund managers. Also the TIER 2 accounts solves the problem of liquidity too.

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