A recent report from Insurance Regulatory and Development Authority (IRDA) said that all the pension plans must provide pension the policyholders, which is exactly expected out of them.
According to Mr.J.Hari Narayanan, IRDA chairman, there are traditional pension plans where annuity may or may not be available. This does not serve the exact purpose of the pension plans. Therefore annuity would be made compulsory for all traditional pension products which are the basic principle of the product.
He also added that if the annuity is not made mandatory then the policyholders would buy a lump sum amount at the end of the tenure of the policy which would almost resemble a retirement fund. In retirement funds the accumulation would happen but the policyholder would not buy annuity from it and this should not happen with pension plans.
According to the circular issued by IRDA, the guidelines drafted for pension plans would include all individual and group unit – linked pension plans, all individual and group non – unit – linked pension plans and all individual and group variable pension plans. This has made clear that the traditional pension plans are also subjected to the guidelines.
In a statement by a life insurance company official, the guidelines have made clear that even traditional pension products are covered under the guidelines where some insurers think that the guidelines are only for the unit – linked pension plans.
Nowadays most of the banks have started selling insurance products along with their loan products.