ICICI Pru Guaranteed Pension Plan: Good or Bad? A Comprehensive Review

Retirement is a time period where you can pursue your dreams at your own pace. You need a regular stream of income to power your dreams.

And you will wish to maintain the same standard of living during your post-retirement period. ICICI Prudential offers Guaranteed Pension through one of their retirement plans.

Will this plan help you to lead a worry-free retirement life?

Is the ICICI Pru Guaranteed Pension Plan Good or Bad when compared with other alternate investment options?

We will answer all these questions today!

Let us review the ICICI Pru guaranteed Pension Plan and find its Advantages(pros) and Disadvantages(cons) in this article. This will guide you to plan better for your retirement life.

Let’s get started!

Table of Contents

1.)An Overview of ICICI Pru Guaranteed Pension Plan – Analysis
2.)Features of ICICI Pru Guaranteed Pension Plan – Analysis
3.)Annuity Plan Options under ICICI Pru Guaranteed Pension Plan– Analysis with Illustration
4.)Review of Benefits in detail under ICICI Pru Guaranteed Pension Plan – Analysis with Illustration
5.)Free Look Period of ICICI Pru Guaranteed Pension Plan
6.)Surrendering ICICI Pru Guaranteed Pension Plan
7.)Advantages of ICICI Pru Guaranteed Pension Plan – Analysis
8.)Disadvantages of ICICI Pru Guaranteed Pension Plan – Analysis
9.)Research methodology of ICICI Pru Guaranteed Pension Plan

• Benefit Illustration – IRR (Internal Rate of Return i.e. Interest Rate) calculation of ICICI Pru Guaranteed Pension Plan

10.)ICICI Pru Guaranteed Pension Plan vs. Other Investment Options

• ICICI Pru Guaranteed Pension Plan Vs. ELSS
• ICICI Pru Guaranteed Pension Plan Vs. ICICI Pru Guaranteed Pension Plan Flexi
• ICICI Pru Guaranteed Pension Plan Vs. ICICI Pru Easy Retirement Plan

11.)ICICI Pru Guaranteed Pension Plan Vs. Other Investment Products
12.)Final verdict on ICICI Pru Guaranteed Pension Plan – Good or Bad?

1. An Overview of ICICI Pru Guaranteed Pension Plan – Analysis

It is a Non-linked Non-participating Individual Single premium annuity plan. It gives you the financial freedom to decide when you want to retire. It guarantees a regular stream of income throughout your life to ensure that you retire from work and not from life.

Refer to the official brochure of ICICI Pru Guaranteed Pension Plan here for more policy details.

2. Features of ICICI Pru Guaranteed Pension Plan – Analysis

• You have the option to choose your deferment period ranging from 1 to 10 years.
• You can take the plan for a single life or a joint life.
• By just Paying once (Purchase Price) you can get guaranteed regular income for your entire life (Annuity).
• There are 11 annuity options to suit your financial needs
• Flexibility to receive annuity monthly, quarterly, half-yearly, or yearly.
• ICICI Pru Guaranteed Pension Plan Purchase Price is returned on death, Critical Illness, or Permanent Disability due to an accident.

3. Annuity Plan Options under ICICI Pru Guaranteed Pension Plan – Analysis with Illustration

Annuity Options	With ROP	Without ROP
Immediate Annuity Options	Single life with Return of Purchase Price	Single Life without Return of Purchase Price
	Joint life with Return of Purchase Price	Joint life without Return of Purchase Price
	Single Life with Return of Purchase Price from the Age of 76
	Single Life with 50% Return of Purchase Price at age 80
	Single Life with Return of Purchase Price at age 80
	Single life with return of purchase price on Critical illness (CI) or Permanent Disability due to accident (PD) or Death
Deferred Annuity Options	Deferred Single life with return of purchase price
	Deferred Joint life with return of purchase price
	Deferred single life with return of purchase price on Critical illness (CI) or Permanent Disability due to accident (PD) or Death

4. Review of Benefits in detail under ICICI Pru Guaranteed Pension Plan – Analysis with Illustration

Plan Option	Annuity	Return of Purchase Price	On the death of Annuitant
Single Life without Return of Purchase Price	Immediate annuity for life	No	–
Joint life without Return of Purchase Price	Immediate annuity for life till either of the two annuitants is alive	No	–
Single life with Return of Purchase Price	Immediate annuity for life	Yes	–
Joint life with Return of Purchase Price	Immediate annuity for life till either of the two annuitants is alive	Yes – on the death of the last survivor	–
Single Life with Return of Purchase Price from the Age of 76	Immediate annuity for life	5% every year from age 76 to 95	The balance purchase price is paid
Single Life with 50% Return of Purchase Price at age 80	Immediate annuity for life	50% on attaining 80 years 50% of death	The balance purchase price is paid
Single Life with Return of Purchase Price at age 80	Immediate annuity for life	100% on attaining 80 years	The purchase price is paid (death before 80 years of age)
Single life with return of purchase price on Critical illness (CI) or Permanent Disability due to accident (PD) or Death	Immediate annuity till the occurrence of specified event	Either on death or occurrence of a specified event before the age of 80	_
Deferred Single life with return of purchase price	Starts after the end of the deferment period till death	Higher ofPurchase Price + Accrued Guaranteed Additions or 105% of Purchase Price	–
Deferred Joint life with return of purchase price	Starts after the end of the deferment period till the death of the last survivor		–
Deferred single life with return of purchase price on Critical illness (CI) or Permanent Disability due to accident (PD) or Death	Starts after the end of the deferment period till death		The benefit (previous column) is payable either on death or occurrence of a specified event before the age of 80 years

5. Free Look Period of ICICI Pru Guaranteed Pension Plan

If you are not satisfied with the terms and conditions of this Policy, you have the option to return the ICICI Pru Guaranteed Pension Policy within 15 days from the date you received the policy document. In the case of electronic policies or policies purchased through Distance Mode, 30 days from the date you received the ICICI Pru Guaranteed Pension policy document.

6. Surrendering ICICI Pru Guaranteed Pension Plan

Surrender value will be payable only for the following annuity options:

• Single life with Return of Purchase Price
• Single life with Return of Purchase Price on Critical illness (CI) or Permanent Disability due to accident (PD) or Death
• Single Life with Return of Purchase Price at Age 80
• Single Life with Return of Purchase Price from the Age of 76
• Single Life with 50% Return of Purchase Price at Age 80
• Joint Life with Return of Purchase Price
• Deferred Single Life with Return of Purchase Price 8. Deferred Joint Life with Return of Purchase Price
• Deferred Single Life with Return of Purchase Price on Critical illness (CI) or Permanent Disability due to accident (PD) or Death

7. Advantages of ICICI Pru Guaranteed Pension Plan – Analysis

• You have the option to choose your annuity option, annuity payout frequency, and the year from which you would like to receive the annuity.
• High Purchase Price Benefit gives you an additional annuity as per the purchase price slab.
• Top-up option allows you to increase your annuity and benefit from a High Purchase Price.
• Loan is allowed only for Deferred annuity options and only during the deferment period.

8. Disadvantages of ICICI Pru Guaranteed Pension Plan – Analysis

• The annuity option once chosen can’t be changed after inception.
• Early Return of purchase is available with limited options.
• The Annuity is fully taxable.
• Surrender of policy is not available for some of the plan options.

9. Research methodology of ICICI Pru Guaranteed Pension Plan

Any annuity plan should not be assessed just with an annuity amount. You need a closer look at the rate of return from the plan. A guaranteed annuity for a lifetime doesn’t mean that the plan suits you. You need to figure out the Internal Rate of Return. This will guide you in decision-making.

Benefit Illustration – IRR (Internal Rate of Return i.e. Interest Rate) calculation of ICICI Pru Guaranteed Pension Plan

We have taken a quote from the ICICI website. A 45-year-old male buys ICICI Pru Guaranteed Pension Plan for ₹ 10 Lakhs. He chooses Deferred Single life with a return on the purchase price. The deferment period is 10 years. The annuity is ₹1.18 Lakhs. Since the plan offers a lifelong annuity, we assume the life expectancy of the annuitant is 85 years.

Age	45 years
Purchase price	10 Lakhs
Deferment period	10 years
Annuity Mode	Annual
Annuity Amount	1,18,988

The annuitant receives a regular annuity after the end of the deferment period. This option offers an annuity till his lifetime. On death, the purchase price is returned.

Age	Year	ICICI Pru Guaranteed Pension Plan
		Annualised premium / Maturity benefit	Death benefit
45	1	-10,00,000	10,00,000
46	2	0	10,00,000
47	3	0	10,00,000
48	4	0	10,00,000
49	5	0	10,00,000
50	6	0	10,00,000
51	7	0	10,00,000
52	8	0	10,00,000
53	9	0	10,00,000
54	10	0	10,00,000
55	11	0	10,00,000
56	12	1,18,988	10,00,000
57	13	1,18,988	10,00,000
58	14	1,18,988	10,00,000
59	15	1,18,988	10,00,000
60	16	1,18,988	10,00,000
61	17	1,18,988	10,00,000
62	18	1,18,988	10,00,000
63	19	1,18,988	10,00,000
64	20	1,18,988	10,00,000
65	21	1,18,988	10,00,000
66	22	1,18,988	10,00,000
67	23	1,18,988	10,00,000
68	24	1,18,988	10,00,000
69	25	1,18,988	10,00,000
70	26	1,18,988	10,00,000
71	27	1,18,988	10,00,000
72	28	1,18,988	10,00,000
73	29	1,18,988	10,00,000
74	30	1,18,988	10,00,000
75	31	1,18,988	10,00,000
76	32	1,18,988	10,00,000
77	33	1,18,988	10,00,000
78	34	1,18,988	10,00,000
79	35	1,18,988	10,00,000
80	36	1,18,988	10,00,000
81	37	1,18,988	10,00,000
82	38	1,18,988	10,00,000
83	39	1,18,988	10,00,000
84	40	1,18,988	10,00,000
85	41	1,18,988	10,00,000
		10,00,000
	IRR	6.03%

In the above illustration, the IRR is calculated at 6.03%. Guaranteed and regular annuities may provide you with a sense of security. Unfortunately, inflation eats away the purchasing power of the money down the lane. The annuity that was sufficient enough in the earlier may look minuscule over a period of time. The rate of return is also not convincing for a long-term investment.

10. ICICI Pru Guaranteed Pension Plan vs. Other Investment Options

Annuity plans do not allow you to have control over your money. You just invest and wait till the deferment period and start receiving your annuity. Once you purchase the plan, you get locked. If we invest the same ₹ 10 Lakhs and wait for 10 years, you get a lump sum maturity amount. This amount could be invested in a debt instrument and start withdrawing an annuity similar to the above illustration. On the death of the investor, you get back the investment amount which is similar to the return of purchase price.

i) ICICI Pru Guaranteed Pension Plan Vs. ELSS

Let us assume that ₹ 10 Lakhs is invested in an ELSS fund for 10 years (Similar to the deferment period). While exiting the fund Capital Gain Tax is payable. The Tax Calculation is given below.

The Pre-Tax Value is ₹ 34.78 Lakhs and the post-tax value is ₹ 32.40 Lakhs. This amount is invested in a 7% return instrument. From this investment, ₹ 1.18 Lakhs is withdrawn annually (Similar to the annuity amount).

Age	Year	ELSS
45	1	-10,00,000
46	2	0
47	3	0
48	4	0
49	5	0
50	6	0
51	7	0
52	8	0
53	9	0
54	10	0
55	11	0
56	12	1,18,988
57	13	1,18,988
58	14	1,18,988
59	15	1,18,988
60	16	1,18,988
61	17	1,18,988
62	18	1,18,988
63	19	1,18,988
64	20	1,18,988
65	21	1,18,988
66	22	1,18,988
67	23	1,18,988
68	24	1,18,988
69	25	1,18,988
70	26	1,18,988
71	27	1,18,988
72	28	1,18,988
73	29	1,18,988
74	30	1,18,988
75	31	1,18,988
76	32	1,18,988
77	33	1,18,988
78	34	1,18,988
79	35	1,18,988
80	36	1,18,988
81	37	1,18,988
82	38	1,18,988
83	39	1,18,988
84	40	1,18,988
85	41	1,18,988
		1,26,42,518
	IRR	8.54%

ELSS Tax Calculation
Pre-tax Maturity value	₹ 34,78,550
Less
Purchase price	₹ 10,00,000
Long-term capital gains	₹ 24,78,550
Exemption limit	₹1,00,000
Taxable LTCG	₹23,78,550
Tax paid on LTCG	₹ 2,37,855
Maturity value after tax	₹ 32,40,695

In the above illustration, the IRR (Internal Rate of Return i.e. Interest Rate) of ELSS is calculated at 8.54% and the Maturity Value after tax is calculated at ₹ 32,40,695.

Under this option, you have more control over your investment. For comparison purposes, we have chosen the same annuity amount. Even you can step up your post-retirement income. This will help you to cope with the inflation.

This analysis clearly shows that investing in the ICICI Pru Guaranteed Pension Plan will have no liberty with your money. Also, the return is lower than the inflation rate.

ii) ICICI Pru Guaranteed Pension Plan Vs. ICICI Pru Guaranteed Pension Plan Flexi

Some of the features of ICICI Pru Guaranteed Pension Plan Flexi are,

• Guaranteed Annuity with the potential to receive payments paid for the rest of your life.
• Choice of monthly, quarterly, half-yearly, or annual Annuity payments.
• You can choose from a variety of annuity alternatives for your retirement.

You can read the complete review of ICICI Pru Guaranteed Pension Plan Flexi here.

iii) ICICI Pru Guaranteed Pension Plan Vs. ICICI Pru Easy Retirement Plan

Unit Linked Pension Plan, or ULPP, is what ICICI Pru Easy Retirement is. While ULPPs and ULIPs are similar without life insurance. When your ULPP tenure is over, ULPP offers you a pension.

This plan gives you some eye-catching features including flexible income phase options and pension boosters.

Read the complete review of the ICICI Pru Easy Retirement Plan here.

11. ICICI Pru Guaranteed Pension Plan Vs. Other Investment Products

After a thorough and detailed analysis of the ICICI Pru Guaranteed Pension Plan with all other investment alternatives, it seems very clear that taking Term Insurance for Life Cover and investing the remaining amount in ELSS is a better option.

12. Final verdict on ICICI Pru Guaranteed Pension Plan – Good or Bad?

It is designed to provide a guaranteed stream of income to policyholders during their retirement years. The pension amount is predetermined and is known at the time of policy purchase. Policyholders can choose from various annuity options, which determine how the pension will be paid. These options may include a single-life annuity, joint-life annuity, annuity with return of purchase price, and more.

Generally, an annuity plan focuses on paying a regular stream of income. But under ICICI Pru Guaranteed Pension Plan critical illness, Total, and permanent disability are mixed with an annuity plan. This doesn’t make it attractive rather adds confusion. High Agent commission is the reason behind the misselling of these policies.

Investing in ICICI Pru Guaranteed Pension Plan is neither beneficial in terms of return nor in terms of liquidity.

Building a diversified investment portfolio for your retirement will take care of post-retirement needs. Are you someone who is searching for retirement plan options on social media platforms like Facebook, Quora, Twitter, etc.? Consult your financial advisor and start planning for your retirement as soon as possible.