ICICI Pru Signature Pension Plan
Planning for the future requires solid financial preparation, and disciplined investing is key to achieving this. But will investing in the ICICI Pru Signature Pension Plan ensure a secure retirement? Will it meet your post-retirement financial needs?
Can the ICICI Pru Signature Pension Plan offer both protection and growth for your retirement?
Is ICICI Pru Signature Pension Plan the plan that grows your wealth while securing your future?
Can the ICICI Pru Signature Pension Plan provide you with a steady income and financial freedom?
In this article, we’ll explore the features, benefits, drawbacks, and potential returns of the ICICI Pru Signature Pension Plan, offering you valuable insights to help you make an informed decision.
What is the ICICI Pru Signature Pension Plan?
What are the features of the ICICI Pru Signature Pension Plan?
Who is eligible for the ICICI Pru Signature Pension Plan?
What are the benefits of the ICICI Pru Signature Pension Plan?
What are the Investment Strategies and Fund Options in the ICICI Pru Signature Pension Plan?
What are the charges under the ICICI Pru Signature Pension Plan?
Grace period, Discontinuance and Revival of the ICICI Pru Signature Pension Plan
Free Look Period for ICICI Pru Signature Pension Plan
Surrendering ICICI Pru Signature Pension Plan
What are the advantages of the ICICI Pru Signature Pension Plan?
What are the disadvantages of the ICICI Pru Signature Pension Plan?
Research Methodology of ICICI Pru Signature Pension Plan
Benefit Illustration – IRR Analysis of the ICICI Pru Signature Pension Plan
ICICI Pru Signature Pension Plan Vs. Other investments
ICICI Pru Signature Pension Plan Vs. Pure-term + PPF / ELSS
Final Verdict on ICICI Pru Signature Pension Plan
ICICI Pru Signature Pension Plan is a Non-Participating, Linked, Pension Individual, Savings plan. This ICICI Pru Signature Pension Plan is specifically designed to secure your retirement by leveraging market-linked growth, helping you achieve your long-term financial goals.
| Premium Payment Term | Minimum / Maximum Policy term | Minimum / Maximum age at Entry | Minimum Vesting Age / Maximum Vesting Age | Minimum Premium | Premium payment Frequency |
| 5 – 9 years | Minimum: 20 years or 80 minus Age at Entry Maximum: 62 years | Minimum: 18 years Maximum: 65 years | 60 years / 80 years | ₹ 1,00,000 | Annual, Half-yearly, Monthly, Single pay |
| 10 – 15 years | ₹ 60,000 | ||||
| Single pay | ₹ 6,00,000 |
Upon policy vesting, you will receive the Fund Value including Top-up Fund Value and Pension Booster
Utilisation of Vesting benefit
Utilise the entire Vesting Benefit to purchase an immediate annuity or deferred annuity from the company at the then prevailing annuity rate or from another insurer (not more than 50%, of the proceeds).
Commute/ withdraw up to 60% of the entire vesting benefit and utilise the balance amount to purchase an immediate annuity or deferred annuity from us at the then prevailing annuity rate or from another insurer (not more than 50%, of the proceeds).
Death Benefit (life insurance benefit) payable will be the higher of –
In the event of death of the Life Assured on the Vesting Date, then only the Vesting Benefit (if applicable) is payable to the Claimant and the Death Benefit is not payable.
As per your savings outlook & risk appetite, you can choose from a range of funds to save your money. The available funds along with their risk-reward profile are given in the table below.
| Asset Allocation | |||||
| S no | Fund Name | Equity & Equity-related Securities | Debt Instrument | Money Market and cash | Potential Risk-Reward Profile |
| 1 | Pension Multi cap Growth Fund | 80-100% | 0-20% | 0-20% | High |
| 2 | Pension Opportunities Fund | 90-100% | 0-10% | 0-10% | High |
| 3 | Pension Blue-chip Fund | 80-100% | 0-20% | 0-20% | High |
| 4 | Pension India Growth Fund | 90-100% | 0-10% | 0-10% | High |
| 5 | Pension Multicap Balanced Fund | 0-60% | 40-100% | 40-100% | Moderate |
| 6 | Pension Balanced Fund | 40-60% | 40-60% | 0-20% | Moderate |
| 7 | Pension Income Fund | 0 | 0-100% | 0-100% | Low |
| 8 | Pension Money Market Fund | 0 | 0-50% | 50-100% | Low |
Under this strategy, you may choose to save your monies in any of the fund options in the proportions of your choice. You can switch monies amongst these funds using the switch option. Unlimited free switches between funds are allowed.
Through Automatic Transfer Strategy (ATS), you can protect your savings against market uncertainties in one or more Pension debt/ equity fund(s) and transfer a fixed amount regularly to one or more Pension equity/ debt fund(s) (from high-risk to low-risk and vice versa)
This strategy enables you to choose an asset allocation that is best suited to your risk appetite and maintains it throughout the ICICI Pru Signature Pension Plan policy term.
You can allocate your premiums between any two funds available with this policy, in the proportion of your choice. Your portfolio will be rebalanced every quarter to ensure that this asset allocation is maintained.
At Policy inception, your savings are distributed between two funds, Pension Multi Cap Growth Fund and Pension Income Fund, based on your age. As you move from one age band to another, your funds are re-distributed based on your age.
| Age of Life Assured (years) | Pension Multi Cap Growth Fund | Pension Income Fund |
| 18-25 | 85% | 15% |
| 26-35 | 75% | 25% |
| 36-45 | 65% | 35% |
| 46-55 | 55% | 45% |
| 56-65 | 45% | 55% |
| 66-80 | 30% | 70% |
For the Money market fund, the FMC is 0.75% p.a. and for all other funds, the FMC is 1.35% p.a.
The monthly policy administration charge is 0.20% of the annual premium for limited pay and Rs 500 per month for single pay.
Limited Pay: 4%
Single Pay: 0%
Top-up Premium: 0%
Mortality charge is the cost of the life insurance coverage and depends on your age and gender. These charges will be levied every month by redemption of units based on the Sum at Risk.
| Age (years) | 30 | 40 | 50 |
| Male | 0.763 | 1.311 | 3.461 |
| Female | 0.735 | 1.134 | 2.759 |
It depends on the policy year in which you discontinue, the premium payment mode and the premium amount.
Inference from these charges – Charges in this ICICI Pru Signature Pension Plan are deducted before your premium is invested, with some continuing throughout the policy term.
In contrast, other market-linked products often have lower charges and offer more transparency in the investment process. These substantial charges in ULIPs can significantly impact your overall returns over time.
The grace period for payment of premium is 15 days for monthly mode of premium payment and 30 days for other modes of premium payment commencing from the premium due date.
In case of discontinuance during the first five policy years: the Fund Value including Top-up Fund Value, if any, shall be credited to the DP Fund after deduction of applicable discontinuance charges then the risk cover if any, shall cease.
The money will remain in the DP fund and will be paid out at the end of the lock-in period (5 years).
In case of discontinuance after the first five policy years: the ICICI Pru Signature Pension Plan policy will be converted into a reduced paid-up policy. The policy shall continue to be in reduced paid-up status without rider cover, if any.
However, the use of the fund is limited and follows a structure similar to the vesting benefit.
You can revive your ICICI Pru Signature Pension Plan policy benefits for their full value within three years from the due date of the first unpaid premium
If you are not satisfied with the terms and conditions of this ICICI Pru Signature Pension Plan policy, return the policy document within 30 days from the date you received it.
During the first five policy years: the Fund Value including Top-up Fund Value, if any, after the applicable Discontinuance Charge is deducted, shall be re-directed to the Discontinued Policy Fund (DP Fund).
The proceeds of the discontinued policy shall be refunded only upon completion of the lock-in period (5 years)
Surrendering after the completion of the fifth policy year, you will be eligible to receive the Fund Value along with Top-up Fund Value, if any.
However, the use of the fund is limited and follows a structure similar to the vesting benefit.
The ICICI Pru Signature Pension Plan enables you to save for your retirement. By making regular contributions, you can build a retirement corpus aimed at providing a steady income in your post-retirement years.
However, it’s crucial to assess the plan’s potential returns to determine its suitability. Let’s calculate the Internal Rate of Return (IRR) based on the figures provided in the ICICI Pru Signature Pension Plan policy brochure.
40-year-old male investing ₹2 lakhs annually in the ICICI Pru Signature Pension Plan, with a policy term of 20 years and a premium payment term of 15 years, the benefits vest at the end of the policy term. At that point, the accumulated benefits can be partially or fully used to purchase an annuity.
| Male | 40 years |
| Sum Assured | ₹ 25,00,000 |
| Policy Term | 20 years |
| Premium Paying Term | 15 years |
| Annualised Premium | ₹ 2,00,000 |
The returns illustrated—4% p.a. and 8% p.a.—are not guaranteed and are merely indicative, as the final fund value is influenced by several factors, including future investment performance.
| At 4% p.a. | At 8% p.a. | ||||
| Age | Year | Annualised premium / Maturity benefit | Death benefit | Annualised premium / Maturity benefit | Death benefit |
| 40 | 1 | -2,00,000 | 25,00,000 | -2,00,000 | 25,00,000 |
| 41 | 2 | -2,00,000 | 25,00,000 | -2,00,000 | 25,00,000 |
| 42 | 3 | -2,00,000 | 25,00,000 | -2,00,000 | 25,00,000 |
| 43 | 4 | -2,00,000 | 25,00,000 | -2,00,000 | 25,00,000 |
| 44 | 5 | -2,00,000 | 25,00,000 | -2,00,000 | 25,00,000 |
| 45 | 6 | -2,00,000 | 25,00,000 | -2,00,000 | 25,00,000 |
| 46 | 7 | -2,00,000 | 25,00,000 | -2,00,000 | 25,00,000 |
| 47 | 8 | -2,00,000 | 25,00,000 | -2,00,000 | 25,00,000 |
| 48 | 9 | -2,00,000 | 25,00,000 | -2,00,000 | 25,00,000 |
| 49 | 10 | -2,00,000 | 25,00,000 | -2,00,000 | 25,00,000 |
| 50 | 11 | -2,00,000 | 25,00,000 | -2,00,000 | 25,00,000 |
| 51 | 12 | -2,00,000 | 25,00,000 | -2,00,000 | 25,00,000 |
| 52 | 13 | -2,00,000 | 25,00,000 | -2,00,000 | 25,00,000 |
| 53 | 14 | -2,00,000 | 25,00,000 | -2,00,000 | 25,00,000 |
| 54 | 15 | -2,00,000 | 25,00,000 | -2,00,000 | 25,00,000 |
| 55 | 16 | 0 | 25,00,000 | 0 | 25,00,000 |
| 56 | 17 | 0 | 25,00,000 | 0 | 25,00,000 |
| 57 | 18 | 0 | 25,00,000 | 0 | 25,00,000 |
| 58 | 19 | 0 | 25,00,000 | 0 | 25,00,000 |
| 59 | 20 | 0 | 25,00,000 | 0 | 25,00,000 |
| 60 | -2,00,000 | 25,00,000 | -2,00,000 | 25,00,000 | |
| 39,84,882 | 66,31,897 | ||||
| IRR | 1.65% | 5.39% | |||
In the 4% growth scenario, the vesting benefit amounts to ₹39.84 lakhs, resulting in an IRR of 1.65% as per the ICICI Pru Signature Pension Plan maturity calculator.
At 8%, the vesting benefit totals ₹66.31 lakhs, yielding an IRR of 5.39% as per the ICICI Pru Signature Pension Plan maturity calculator.
These IRRs are considered notional, as the proceeds must be used to purchase an annuity at the rates prevailing at vesting. Since annuity rates are not guaranteed and fund utilization is restricted, the ICICI Pru Signature Pension Plan may be a less appealing investment option.
The ICICI Pru Signature Pension Plan limits how you can use your accumulated retirement corpus. To bypass this restriction, consider an alternative investment strategy that offers greater flexibility and liquidity.
Using the same parameters as the previous example, we can separate insurance and investment to achieve better returns and adaptability. Let’s explore this alternative strategy:
Life Insurance Component: opt for a pure-term life insurance policy with a sum assured of ₹25 lakhs, which aligns with the death benefit under the ICICI Pru Signature Pension Plan. Although the plan doesn’t specify a sum assured, the death benefit is either the premium paid or the fund value.
A ₹25 lakh term insurance policy would cost ₹29,900 annually for a 20-year term, with a premium payment period of 10 years.
| Pure Term Life Insurance Policy | |
| Sum Assured | ₹ 25,00,000 |
| Policy Term | 20 years |
| Premium Paying Term | 10 years |
| Annualised Premium | ₹ 29,900 |
| Investment | ₹ 1,70,100 |
For the first 10 years, after paying the term insurance premium, the remaining amount can be invested. During the next 5 years, the entire sum is allocated to investments, and in the final 5 years, the investment grows without any further contributions.
| Age | Year | Term Insurance premium + PPF | Death benefit | Term Insurance premium + ELSS | Death benefit |
| 40 | 1 | -2,00,000 | 25,00,000 | -2,00,000 | 25,00,000 |
| 41 | 2 | -2,00,000 | 25,00,000 | -2,00,000 | 25,00,000 |
| 42 | 3 | -2,00,000 | 25,00,000 | -2,00,000 | 25,00,000 |
| 43 | 4 | -2,00,000 | 25,00,000 | -2,00,000 | 25,00,000 |
| 44 | 5 | -2,00,000 | 25,00,000 | -2,00,000 | 25,00,000 |
| 45 | 6 | -2,00,000 | 25,00,000 | -2,00,000 | 25,00,000 |
| 46 | 7 | -2,00,000 | 25,00,000 | -2,00,000 | 25,00,000 |
| 47 | 8 | -2,00,000 | 25,00,000 | -2,00,000 | 25,00,000 |
| 48 | 9 | -2,00,000 | 25,00,000 | -2,00,000 | 25,00,000 |
| 49 | 10 | -2,00,000 | 25,00,000 | -2,00,000 | 25,00,000 |
| 50 | 11 | -2,00,000 | 25,00,000 | -2,00,000 | 25,00,000 |
| 51 | 12 | -2,00,000 | 25,00,000 | -2,00,000 | 25,00,000 |
| 52 | 13 | -2,00,000 | 25,00,000 | -2,00,000 | 25,00,000 |
| 53 | 14 | -2,00,000 | 25,00,000 | -2,00,000 | 25,00,000 |
| 54 | 15 | -2,00,000 | 25,00,000 | -2,00,000 | 25,00,000 |
| 55 | 16 | 0 | 25,00,000 | 0 | 25,00,000 |
| 56 | 17 | 0 | 25,00,000 | 0 | 25,00,000 |
| 57 | 18 | 0 | 25,00,000 | 0 | 25,00,000 |
| 58 | 19 | 0 | 25,00,000 | 0 | 25,00,000 |
| 59 | 20 | 0 | 25,00,000 | 0 | 25,00,000 |
| 60 | -2,00,000 | 25,00,000 | -2,00,000 | 25,00,000 | |
| 67,60,768 | 1,16,33,303 | ||||
| IRR | 5.53% | 9.43% |
Investment Component: Based on your risk tolerance, high-risk investors might prefer equity investments, while risk-averse individuals could choose debt instruments. In this scenario, we compare PPF (debt) and ELSS (equity).
The PPF has an annual investment limit of ₹1.5 lakhs. However, in this scenario, the investment amount exceeds that limit, which can be overlooked as it is purely for illustrative purposes.
After 20 years, the PPF account grows to ₹67.60 lakhs with an IRR of 5.53%. Although this is just ₹1 lakh higher than the ICICI Pru Signature Pension Plan, the key advantage is that the full maturity value is available for you to spend as you wish, unlike the restrictions in the pension plan.
For ELSS, after 20 years, the pre-tax value reaches ₹1.28 crores. After accounting for capital gains tax, the post-tax value is ₹1.16 crores, yielding a post-tax IRR of 9.43%, significantly higher than the pension plan.
| ELSS Tax Calculation | |
| Maturity value after 20 years | 1,28,91,489 |
| Purchase price | 27,01,000 |
| Long-Term Capital Gains | 1,01,90,489 |
| Exemption limit | 1,25,000 |
| Taxable LTCG | 1,00,65,489 |
| Tax paid on LTCG | 12,58,186 |
| Maturity value after tax | 1,16,33,303 |
This comparison shows that the alternative investment strategy delivers much higher returns and offers complete control over your funds.
You have the freedom to access your investments when needed, unlike the ICICI Pru Signature Pension Plan, which forces you to purchase an annuity, making it a less attractive option for building your retirement corpus.
During your working years, you set aside funds for retirement, known as the accumulation phase. This phase is crucial, as it directly impacts your lifestyle in the distribution phase, which follows retirement. Both phases need to be carefully planned for a stress-free retirement.
The ICICI Pru Signature Pension Plan only focuses on the accumulation phase, and it doesn’t guarantee the annuity amount. The annuity plan itself is not included in this policy and also it has a high agent commission.
Instead, the benefits that vest at the end of the term, whether fully or partially, must be used to purchase an annuity at the prevailing rates at that time.
Since the returns are market-linked, the plan carries a high level of risk. When you factor in this high risk, the substantial charges, and the limitations on accessing your benefits, the ICICI Pru Signature Pension Plan becomes less attractive as a tool for building your retirement corpus.
Starting early in your career is key to growing your retirement savings, as compound interest can significantly boost your wealth over time.
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To create a personalized and effective retirement plan, it’s recommended to consult a certified financial planner, to ensure a secure and comfortable retirement.
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