IRDA gives shape to model Standard Pension Plan policy

Venkatachari Jagannathan
15 May 2003

However, as in the case of the telecom industry, there are no compulsions on the part of life insurers to offer this scheme as an IRDA scheme.

Concerned about the lack of awareness among the public about the growing importance of retirement savings on the one hand, and the lack of suitable and acceptable pension plans in the market on the other, the authority wanted to frame a standard, simple plan with a uniform technical structure to be sold by all life insurance companies.

A committee was set up under the chairmanship of N K Shinkar, consulting actuary, IRDA, with several actuaries as members.

However, what is interesting is the timing of the standard plan announced by IRDA. The government had earlier announced its intention to set up a separate pension regulator. All these years IRDA has been demanding to regulate the pensions sector as and when it is thrown open.

The IRDA pension plan
Any body who is aged between 18 and 60 years has to make regular and periodic payments to a life insurer for an agreed period. Upon attaining the vesting age (the age chosen by the policyholder: between 50 and 70 years) the accumulated sum will be given to the policyholder for buying annuity from any life insurance company to get a steady income during retired life.

According to IRDA, life insurers are free to offer additional features, say life cover to its standard plan for extra charge. The minimum contract term will be five years and the plan allows deferment of vesting age by five years once during the policy period.