Bajaj Allianz Life Saral Pension Plan
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.
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
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.
| 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 |
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.
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.
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.
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.
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.
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.
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.
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,
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.
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