Bajaj Allianz Life Saral Pension Plan Review: Good or Bad?

Is this the right pension plan to secure your retirement future?

Does the Bajaj Allianz Life Saral Pension Plan offer the features you need for a comfortable retirement?

Can this plan provide the stability and benefits you’re looking for in a pension plan?

In this article, we will review the Bajaj Allianz Life Saral Pension plan, exploring its features, advantages, disadvantages, and potential returns through IRR analysis. This review will help you determine whether investing in this plan is a good option for your retirement needs.

Table of Contents:

What is the Bajaj Allianz Life Saral Pension Plan?

What are the features of the Bajaj Allianz Life Saral Pension Plan?

Who is Eligible for the Bajaj Allianz Life Saral Pension Plan?

What are the Annuity options and benefits of the Bajaj Allianz Life Saral Pension Plan?

Free Look period of Bajaj Allianz Life Saral Pension Plan

Surrendering Bajaj Allianz Life Saral Pension Plan

What are the advantages of the Bajaj Allianz Life Saral Pension Plan?

What are the disadvantages of the Bajaj Allianz Life Saral Pension Plan?

Research Methodology of Bajaj Allianz Life Saral Pension Plan

Benefit Illustration – IRR Analysis of Bajaj Allianz Life Saral Pension Plan

Bajaj Allianz Life Saral Pension Plan Vs. Other Investment products

Bajaj Allianz Life Saral Pension Plan Vs. Other Fixed Return Instruments

Bajaj Allianz Life Saral Pension Plan Vs. Inflation-adjusted income

Final Verdict on Bajaj Allianz Life Saral Pension Plan

What is the Bajaj Allianz Life Saral Pension Plan?

Bajaj Allianz Life Saral Pension Plan is a Single Premium Non-Linked, Non- Participating, Individual Immediate Annuity plan. Bajaj Allianz Life Saral Pension Plan provides a regular income and also returns the purchase price on death.

What are the features of the Bajaj Allianz Life Saral Pension Plan?

• Lifelong guaranteed regular income
• Receive annuity from next month onwards under monthly annuity option and after 3 months, 6 months, and 1 year in case of quarterly, half-yearly, and annual options respectively
• Purchase Price (ROP) paid to the nominee on death
• Joint life option with regular income for both lives

Who is Eligible for the Bajaj Allianz Life Saral Pension Plan?

Parameter	Details
Entry Age	Minimum: 40 years Maximum: 80 years
Annuity Options	1. Life Annuity with Return of Purchase Price (ROP) on death 2. Joint Life Last Survivor with 100% of Annuity to spouse & with Return of Purchase Price (ROP) on the death of Last Survivor
Minimum Annuity Amount	Yearly – 12,000 Half-yearly – 6,000 Quarterly – 3,000 Monthly – 1,000
Maximum Annuity Amount	No Limit
Purchase Price	Depends on annuity Amount
Premium paying term	Single Premium

What are the Annuity options and benefits of the Bajaj Allianz Life Saral Pension Plan?

You can choose any one of the following annuity options at inception.

Option A: Life Annuity with Return of Purchase Price (ROP) on death (Available for all channels including POS Channel)

The annuity will be payable to you throughout life and on death the purchase price will be returned to your nominee.

Option B: Joint Life Last Survivor with 100% of Annuity to spouse & with Return of Purchase Price (ROP) on the death of Last Survivor (Available for all channels excluding POS Channel)

The annuity will be payable to you throughout life and on death, your spouse will receive 100% of the prevailing Annuity throughout his / her life. On the death of the last survivor, the purchase price will be returned to the nominee.

Free Look period of Bajaj Allianz Life Saral Pension Plan

If the Policyholder disagrees with any of Bajaj Allianz Life Saral Pension Plan terms & conditions, he has the option to return the Bajaj Allianz Life Saral Pension Plan Policy to the insurer within 15 days from the date of receipt of the Policy Document and a period of 30 days in case of electronic Policies and Policies obtained through distance mode.

Surrendering Bajaj Allianz Life Saral Pension Plan

You can surrender your Bajaj Allianz Life Saral Pension Plan policy any time after 6 months from the date of commencement. The Bajaj Allianz Life Saral Pension Plan policy can be surrendered if you, your spouse, or any of your children are diagnosed as suffering from any of the listed critical illnesses.

The surrender value payable is 95% of the Purchase price subject to the deduction of any outstanding loan amount and loan interest, if any.

What are the advantages of the Bajaj Allianz Life Saral Pension Plan?

• You will have the option to change the Annuity payment frequency at any policy anniversary.
• Access to money through loan
• Liquidity on diagnosis of Critical Illness
• Return of purchase price acts as a legacy

What are the disadvantages of the Bajaj Allianz Life Saral Pension Plan?

• Annuity option once chosen at inception can’t be changed during the Bajaj Allianz Life Saral Pension Plan policy term.
• The annuity is fully taxable
• The plan can be surrendered only on specified conditions
• There is no yearly step-up annuity to beat inflation

Research Methodology of Bajaj Allianz Life Saral Pension Plan

The Bajaj Allianz Life Saral Pension Plan is a fixed return instrument, meaning your returns are locked in at the time of purchase, regardless of any interest rate changes in the economy. Let’s calculate the Internal Rate of Return (IRR) for this plan using the figures provided in the policy brochure.

Benefit Illustration – IRR Analysis of Bajaj Allianz Life Saral Pension Plan

A 60-year-old male purchases the Bajaj Allianz Life Saral Pension Plan with a purchase price of ₹25 lakhs and selects Option A: Life Annuity with Return of Purchase Price (ROP) on death. He receives an annual annuity of ₹1.80 lakhs.

Assuming a life expectancy of 85 years, the purchase price is returned to the nominee at age 85. For this cash flow, the IRR is calculated to be 7.13% as per the Bajaj Allianz Life Saral Pension Plan maturity calculator

Male	60 years
Purchase Price	₹ 25,00,000
Annuity	₹ 1,80,800
Annuity Option	Option A
Returns	7.13%

While this rate of return appears attractive for a senior citizen, the plan has significant drawbacks regarding liquidity. Once the plan is purchased, funds are locked in, and surrendering the plan is only possible under specified conditions, such as critical illness.

Although a regular income stream is crucial during retirement, liquidity is equally important.

Additionally, the annuity amount remains fixed throughout the individual’s lifetime, which can be problematic as expenses tend to rise annually. This fixed income may hinder maintaining one’s lifestyle during retirement.

In summary, while the Bajaj Allianz Life Saral Pension Plan offers a seemingly attractive rate of return, it falls short in terms of liquidity and inflation-adjusted income.

Bajaj Allianz Life Saral Pension Plan Vs. Other Investment products

In this section, we will explore some alternative investment options for generating a regular income stream during retirement. This information will provide insights on how to effectively manage your retirement funds.

Bajaj Allianz Life Saral Pension Plan Vs. Other Fixed Return Instruments

Below are three fixed-income investment options for retirees, along with their expected returns as of June 2024:

Investment Option	Expected Returns
Bank Fixed Deposit (FD)	6-7% annually
Senior Citizen Savings Scheme (SCSS)	8.20% annually
RBI Floating Rate Savings Bond	8.05% annually

Bank Fixed Deposits: A secure investment option offered by banks, providing a fixed interest rate over a specified period.

Senior Citizen Savings Scheme (SCSS): A government-backed savings scheme specifically designed for senior citizens, offering regular interest payments.

RBI Floating Rate Bond: Government-issued bonds with interest rates linked to the National Savings Certificate (NSC) rate, providing biannual interest payouts.

These investment options offer a regular income stream similar to the Bajaj Allianz Life Saral Pension Plan. Notably, these alternatives also provide greater liquidity and often yield higher returns than the Bajaj Allianz Life Saral Pension Plan.

However, one limitation of these options is the lack of inflation-adjusted income. Next, we will explore scenarios and strategies to achieve an inflation-adjusted income.

Bajaj Allianz Life Saral Pension Plan Vs. Inflation-adjusted income

The following illustration uses the same figures as the Bajaj Allianz Life Saral Pension Plan. With a retirement corpus of ₹25 lakhs and an initial annual withdrawal of ₹1.80 lakhs, the strategy is worked out to demonstrate potential outcomes.

Let’s assume that 60% of ₹25 lakhs, i.e., ₹15 lakhs, is invested in equity for wealth creation, while the remaining ₹10 lakhs, is allocated to debt instruments for regular needs. The equity investment is assumed to generate a return of 12%, and the debt investment yields 6%.

Every 6 years, the debt portion is replenished from the equity portion, and the annual withdrawal amount increases by 6% to combat inflation.

Age	Equity Portion			The shift from Equity to Debt	Debt Portion
	Opening Balance	Yearly withdrawal	Closing Balance		Opening Balance	Yearly withdrawal	Closing Balance
60	15,00,000	–	16,80,000	–	10,00,000	1,80,800	8,68,352
61	16,80,000	–	18,81,600	–	8,68,352	1,80,800	7,28,805
62	18,81,600	–	21,07,392	–	7,28,805	1,80,800	5,80,885
63	21,07,392	–	23,60,279	–	5,80,885	1,80,800	4,24,091
64	23,60,279	–	26,43,513	–	4,24,091	1,80,800	2,57,888
65	26,43,513	–	29,60,734	–	2,57,888	1,80,800	81,713
66	29,60,734	15,00,000	16,36,022	15,00,000	15,81,713	1,91,648	14,73,469
67	16,36,022	–	18,32,345	–	14,73,469	1,91,648	13,58,730
68	18,32,345	–	20,52,226	–	13,58,730	1,91,648	12,37,107
69	20,52,226	–	22,98,493	–	12,37,107	1,91,648	11,08,187
70	22,98,493	–	25,74,312	–	11,08,187	1,91,648	9,71,531
71	25,74,312	–	28,83,230	–	9,71,531	1,91,648	8,26,676
72	28,83,230	15,00,000	15,49,218	15,00,000	23,26,676	2,03,147	22,50,941
73	15,49,218	–	17,35,124	–	22,50,941	2,03,147	21,70,662
74	17,35,124	–	19,43,339	–	21,70,662	2,03,147	20,85,566
75	19,43,339	–	21,76,539	–	20,85,566	2,03,147	19,95,364
76	21,76,539	–	24,37,724	–	19,95,364	2,03,147	18,99,750
77	24,37,724	–	27,30,251	–	18,99,750	2,03,147	17,98,400
78	27,30,251	27,30,251	-0	27,30,251	45,28,650	2,15,336	45,72,114
79					45,72,114	2,15,336	46,18,185
80					46,18,185	2,15,336	46,67,020
81					46,67,020	2,15,336	47,18,785
82					47,18,785	2,15,336	47,73,656
83					47,73,656	2,15,336	48,31,820
84					48,31,820	2,15,336	48,93,473
85					48,93,473	2,15,336	49,58,826

This strategy ensures that the equity portion helps to counteract inflation and maintain your lifestyle post-retirement, while the debt portion covers regular needs. The allocation ratio is set at 60:40 between equity and debt, respectively, with rebalancing every 6 years.

The final transfer from equity to debt occurs at the age of 78. This example illustrates one way to balance assets, though it can be adjusted based on individual preferences and risk tolerance.

With this strategy,

• You get regular income,
• Combat inflation and maintain a lifestyle
• Retirement corpus outlives you

Final Verdict on Bajaj Allianz Life Saral Pension Plan

The Bajaj Allianz Life Saral Pension Plan offers a hassle-free investment with immediate annuity benefits, providing a steady stream of income throughout your lifetime. You pay the purchase price and start receiving the annuity right away.

However, upon analysing the plan’s features, we found that its lack of liquidity, high agent commissions, and non-inflation-adjusted income are significant drawbacks. These limitations can diminish the benefits of having a steady income stream.

Including an equity allocation in your portfolio can help you combat inflation during the post-retirement period. Diversifying your retirement corpus across various asset classes ensures that your retirement funds can withstand different types of risks.

Is it appropriate to rely only on Quora, Facebook, and Twitter for financial advice?

For personalized retirement planning, consult a Certified Financial Planner. They can tailor your retirement portfolio to suit your personal risk tolerance and requirements.