Listen to this article
Can the PNB MetLife Immediate Annuity Plan provide a guarantee of financial security?
Can the PNB MetLife Immediate Annuity Plan provide a steady income for your retirement?
Can the PNB MetLife Immediate Annuity Plan help you overcome market fluctuations and provide a stable income?
This review delves into the PNB MetLife Immediate Annuity plan’s features, advantages, disadvantages, and return analysis to determine if this aligns with your retirement goals.
Table of Contents:
What is the PNB MetLife Immediate Annuity Plan?
What are the features of the PNB MetLife Immediate Annuity Plan?
Who is eligible for the PNB MetLife Annuity Plan?
What Plan options and Annuity options are available in the PNB MetLife Immediate Annuity Plan?
Free Look period for the PNB MetLife Immediate Annuity Plan
Surrendering the PNB MetLife Immediate Annuity Plan
What are the advantages of the PNB MetLife Immediate Annuity Plan?
What are the disadvantages of the PNB MetLife Immediate Annuity Plan?
Research Methodology of PNB MetLife Immediate Annuity Plan
Benefit Illustration – IRR Analysis of the PNB MetLife Immediate Annuity Plan
PNB MetLife Immediate Annuity Plan Vs. Other investments
PNB MetLife Immediate Annuity Plan Vs. Fixed-income instruments
PNB MetLife Immediate Annuity Plan Vs. Inflation-adjusted income
Final Verdict on PNB MetLife Immediate Annuity Plan
What is the PNB MetLife Immediate Annuity Plan?
PNB MetLife Immediate Annuity Plan is an Individual, Non-Linked, Non-Participating, Immediate Annuity Product. PNB MetLife Immediate Annuity Plan provides lifetime income for you and your spouse and leaves a legacy for your family through the return of Purchase Price or Balance of Purchase Price, on your demise
What are the features of the PNB MetLife Immediate Annuity Plan?
- Pay only once to ensure guaranteed income for your lifetime.
- Choose from a wide range of annuity options
- Select the frequency of your payout- monthly, quarterly, half-yearly or yearly
- Cover your spouse through Joint Life annuity options
- Leave a legacy for your family through Return of Purchase Price/ Balance annuity options
- NPS – Family Pension Option is available for National Pension System Subscribers.
Who is eligible for the PNB MetLife Annuity Plan?
| Stand Alone Annuity | Tied Annuity | |
| Minimum Age at Entry | Single Life option – 30 years Joint Life options: 40 years QROPS Policies: 55 Years |
Single Life option – 0 years Joint Life options: 18 years |
| Maximum Age at Entry | 75 years | 90 years |
| Premium Payment Term (PPT) | Single pay | |
| Policy Term | Whole Life | |
| Annuity Payout Frequency | Yearly, Half-Yearly, Quarterly, Monthly | |
| Minimum Purchase Price | Increasing Life Annuity and Increasing Life Annuity with Return of Purchase Price – Rs. 500,000 Other options – Rs. 300,000 NPS – Not applicable |
Not Applicable |
| Minimum Annuity payout | ₹ 1,000 per month | |
| Maximum Annuity payout | Subject to entry age of Annuitant & Purchase Price | |
What Plan options and Annuity options are available in the PNB MetLife Immediate Annuity Plan?
There are two plan options differentiated based on the source of funds to purchase the plan.
Tied Annuity: Utilize the vesting proceeds of your existing PNB MetLife pension plans.
Standalone Annuity: Your own accumulated funds and other sources like NPS, QROPS & proceeds from the pension plan of other companies.
You can choose any one of the following annuity options at inception. The annuity shall be payable in arrears under all options. The annuity amount will vary depending on the annuity option chosen by the PNB MetLife Immediate Annuity Plan Policyholder.
| Option | Annuity | Death Benefit | |
| Single Life | Life Annuity | Payable at a constant rate throughout the life of the annuitant | NIL |
| Life Annuity with return of Purchase Price | Payable at a constant rate throughout the life of the annuitant | The purchase price shall be payable to the nominee | |
| Life Annuity with Return of Balance | Payable at a constant rate throughout the life of the annuitant | An amount equal to the purchase price less the sum of total annuity payments made as on the date of death is payable to the nominee) provided the difference is positive) | |
| Life Annuity with a certain period of 5, 10, 15 or 20 years | Payable at a constant rate for a guaranteed period of 5, 10, 15 or 20 years from policy issue, as per the option exercised by the annuitant, irrespective of survival of the annuitant. After the guaranteed period, the annuity is payable only if he survives. | NIL | |
| Increasing Life Annuity (Increasing @ 3%) | Annuity payable shall increase @ 3% compounded per annum and shall be payable throughout the life of the annuitant. | NIL | |
| Increasing Life Annuity (Increasing @ 3%) with the return of Purchase Price | Annuity payable shall increase @ 3% compounded per annum and shall be payable throughout the life of the annuitant. | The purchase price shall be payable to the nominee | |
| Joint Life | Joint Life Last Survivor Annuity | Payable at a constant rate as long as one of the annuitants is alive | NIL |
| Joint Life Last Survivor Annuity with return of Purchase Price | Payable at a constant rate as long as one of the annuitants is alive | In case of death of the last surviving annuitant or simultaneous death, the purchase price shall be payable to the nominee | |
| Joint Life Last Survivor Annuity reduced to 50% for spouse | The annuity payments shall be payable in full as long as the primary life is alive. In case of death of the primary life, 50% of annuity payments shall be payable to the spouse for life. | NIL | |
| Joint Life Last Survivor Annuity reduced to 50% for the spouse with the return of Purchase Price | The annuity payments shall be payable in full as long as the primary life is alive. In case of death of the primary life, 50% of annuity payments shall be payable to the spouse for life. | In case of death of the last surviving annuitant or simultaneous death, the purchase price shall be payable to the nominee | |
| NPS – FAMILY INCOME | Regulations as prescribed by the Pension Fund Regulatory and Development Authority (PFRDA) | ||
Free Look period for the PNB MetLife Immediate Annuity Plan
If you have any objections to the terms and conditions of your PNB MetLife Immediate Annuity Plan Policy, you may cancel the Policy within 30 days from the date of receipt of the policy document whether received electronically or otherwise.
Surrendering the PNB MetLife Immediate Annuity Plan
There is no surrender benefit in this PNB MetLife Immediate Annuity Plan policy.
What are the advantages of the PNB MetLife Immediate Annuity Plan?
- A straightforward, single-payment product.
- Provides regular income for life, with the option to extend payments to your spouse after your lifetime.
- The return of the purchase price can serve as a legacy for your beneficiaries.
What are the disadvantages of the PNB MetLife Immediate Annuity Plan?
- Annuity payments are subject to full taxation.
- Once the policy starts, the chosen annuity option cannot be changed.
- The annuity is not inflation-adjusted.
- The policy cannot be surrendered at any time after selection.
Research Methodology of PNB MetLife Immediate Annuity Plan
The PNB MetLife Immediate Annuity Plan offers a range of annuity options tailored to meet your cash flow needs. Some individuals may prefer a steady income, while others might opt for variations like regular income with a return on the purchase price or a guaranteed annuity for a set period.
However, evaluating cash flow patterns alone isn’t sufficient to choose the best plan. Therefore, we will calculate the Internal Rate of Return (IRR) based on the figures provided in the PNB MetLife Immediate Annuity Plan policy brochure.
Benefit Illustration – IRR Analysis of the PNB MetLife Immediate Annuity Plan
Consider a 60-year-old male who invests ₹25 Lakhs in the PNB MetLife Immediate Annuity with a single payment. Since all annuity options provide income for life, we’ll assume a life expectancy of 85 years.
He selects the Life Annuity with a return of the purchase price, where the annual annuity amount is ₹1,53,899. Let’s calculate the IRR for this cash flow.
| Male | 60 years |
| Purchase Price | 25 Lakhs |
| Life Expectancy | 85 years |
Assuming the purchase price is returned at age 85, the IRR for this cash flow is 6.04% as per the PNB MetLife Immediate Annuity Plan maturity calculator. This rate of return is lower than what debt instruments typically offer.
Additionally, the investment is locked in, with no option for surrender value.
| Age | Life Annuity (level) with Return of Balance of Purchase Price |
| 60 | -25,00,000 |
| 61 | 1,53,899 |
| 62 | 1,53,899 |
| 63 | 1,53,899 |
| 64 | 1,53,899 |
| 65 | 1,53,899 |
| 66 | 1,53,899 |
| 67 | 1,53,899 |
| 68 | 1,53,899 |
| 69 | 1,53,899 |
| 70 | 1,53,899 |
| 71 | 1,53,899 |
| 72 | 1,53,899 |
| 73 | 1,53,899 |
| 74 | 1,53,899 |
| 75 | 1,53,899 |
| 76 | 1,53,899 |
| 77 | 1,53,899 |
| 78 | 1,53,899 |
| 79 | 1,53,899 |
| 80 | 1,53,899 |
| 81 | 1,53,899 |
| 82 | 1,53,899 |
| 83 | 1,53,899 |
| 84 | 1,53,899 |
| 85 | 25,00,000 |
| IRR | 6.04% |
Given the rising cost of living, a fixed income may prove insufficient over time, potentially leading to a financial shortfall. The combination of a lower return and the inability to access funds highlights a significant drawback of the PNB MetLife Immediate Annuity Plan.
PNB MetLife Immediate Annuity Plan Vs. Other investments
PNB MetLife’s Immediate Annuity Plan doesn’t offer competitive investment returns. For regular cash flow, there are more favourable products in the market that provide guaranteed returns and consistent income.
PNB MetLife Immediate Annuity Plan Vs. Fixed-income instruments
| Alternate Investment option | Interest Rate |
| Senior Citizen Savings Schemes (SCSS) | 8.20% |
| Bank FD | 7% – 8% |
| RBI Floating Rate Bonds | 8.05% (Floating) |
Senior Citizen Savings Scheme: This scheme offers a return of 8.20% per annum, allowing seniors to park their retirement corpus and receive regular income.
Bank Fixed Deposits (FDs): Bank FD rates range between 7% – 8% per annum, with some banks offering an additional 25 basis points for senior citizens. Interest can be accumulated or received as regular income.
RBI Floating Rate Bonds: These risk-free investments currently offer an interest rate of 8.05% per annum, with interest paid semi-annually. Although they have a seven-year lock-in period, senior citizens can withdraw early with a penalty.
However, these options provide a fixed income without adjustments for inflation. To keep up with inflation, it’s crucial to include equity in your portfolio. Periodically rebalancing your portfolio helps you earn an inflation-adjusted income and ensures that your corpus lasts beyond your lifetime.
PNB MetLife Immediate Annuity Plan Vs. Inflation-adjusted income Through Mutual Funds
For example, let’s assume 60% of ₹25 Lakhs, i.e., ₹15 Lakhs, is invested in equity for wealth creation, while the remaining 40%, i.e., ₹10 Lakhs, is invested in debt for regular income. We assume an equity return of 12% and a debt return of 6%. Every five years, the debt portion is replenished from equity.
| Age | Equity Portion | Shift from Equity to Debt | Debt Portion | ||||
| Opening Balance | Yearly withdrawal | Closing Balance | Opening Balance | Yearly withdrawal | Closing Balance | ||
| 61 | 15,00,000 | – | 16,80,000 | – | 10,00,000 | 1,53,899 | 8,96,867 |
| 62 | 16,80,000 | – | 18,81,600 | – | 8,96,867 | 1,53,899 | 7,87,546 |
| 63 | 18,81,600 | – | 21,07,392 | – | 7,87,546 | 1,53,899 | 6,71,666 |
| 64 | 21,07,392 | – | 23,60,279 | – | 6,71,666 | 1,53,899 | 5,48,833 |
| 65 | 23,60,279 | – | 26,43,513 | – | 5,48,833 | 1,53,899 | 4,18,630 |
| 66 | 26,43,513 | 10,00,000 | 18,40,734 | 10,00,000 | 14,18,630 | 1,63,133 | 13,30,827 |
| 67 | 18,40,734 | – | 20,61,622 | – | 13,30,827 | 1,63,133 | 12,37,756 |
| 68 | 20,61,622 | – | 23,09,017 | – | 12,37,756 | 1,63,133 | 11,39,100 |
| 69 | 23,09,017 | – | 25,86,099 | – | 11,39,100 | 1,63,133 | 10,34,525 |
| 70 | 25,86,099 | – | 28,96,431 | – | 10,34,525 | 1,63,133 | 9,23,676 |
| 71 | 28,96,431 | 28,96,431 | -0 | 28,96,431 | 38,20,106 | 1,72,921 | 38,66,017 |
| 72 | -0 | – | -0 | – | 38,66,017 | 1,72,921 | 39,14,681 |
| 73 | -0 | – | -0 | – | 39,14,681 | 1,72,921 | 39,66,266 |
| 74 | -0 | – | -0 | – | 39,66,266 | 1,72,921 | 40,20,946 |
| 75 | -0 | – | -0 | – | 40,20,946 | 1,72,921 | 40,78,906 |
| 76 | -0 | -0 | 0 | -0 | 40,78,906 | 1,83,296 | 41,29,347 |
| 77 | 0 | – | 0 | – | 41,29,347 | 1,83,296 | 41,82,814 |
| 78 | 0 | – | 0 | – | 41,82,814 | 1,83,296 | 42,39,489 |
| 79 | 0 | – | 0 | – | 42,39,489 | 1,83,296 | 42,99,564 |
| 80 | 42,99,564 | 1,83,296 | 43,63,244 | ||||
| 81 | 43,63,244 | 1,94,294 | 44,19,087 | ||||
| 82 | 44,19,087 | 1,94,294 | 44,78,281 | ||||
| 83 | 44,78,281 | 1,94,294 | 45,41,026 | ||||
| 84 | 45,41,026 | 1,94,294 | 46,07,536 | ||||
| 85 | 46,07,536 | 1,94,294 | 46,78,036 | ||||
The first-year annuity is assumed to be similar to PNB MetLife Immediate Annuity Plan’s Life Annuity with Return of Purchase Price, which is ₹1,53,899.
Every five years, your annual withdrawal increases by 6% to combat inflation. Upon death, the purchase price is returned to the nominee, assuming the investment is fully withdrawn to match the same.
Under this alternate investment strategy, at age 85, your corpus would grow to ₹46 Lakhs, which is significantly higher than the ₹25 Lakhs return of the purchase price offered by the PNB MetLife Immediate Annuity Plan.
In this strategy, the equity portion is fully transferred to debt at age 71, though this can be adjusted based on your risk tolerance.
Even with a complete shift to debt, the corpus outlives you. Overall, this approach provides inflation-adjusted income and full liquidity—benefits that the PNB MetLife Immediate Annuity Plan lacks.
Final Verdict on PNB MetLife Immediate Annuity Plan
The PNB MetLife Immediate Annuity Plan offers a regular income for life in exchange for a lump sum payment, which is its main selling point.
While the income may seem sufficient in the early years of retirement, it can become inadequate as time goes on due to inflation, which gradually erodes your purchasing power.
Cash flow analysis clearly shows that a fixed income, without adjustments for inflation, is not enough for a retiree’s long-term needs. Additionally, the inability to access your funds due to the plan’s locking mechanism poses a significant challenge and also it has a high agent commission.
These factors raise concerns about the suitability of the PNB MetLife Immediate Annuity Plan for managing your retirement savings.
There are better alternatives available that offer steady income, liquidity, and higher returns—features that the PNB MetLife Immediate Annuity Plan lacks.
Incorporating equity into your portfolio is essential for ensuring that your retirement corpus lasts beyond your lifetime while also providing an inflation-adjusted income.
Retirement planning is a vital component of financial planning, and no one-size-fits-all annuity or pension plan can meet everyone’s needs.
Do Quora, Facebook, and Twitter have the final say when it comes to financial advice?
For personalized retirement planning, consult a Certified Financial Planner who can help you develop a customized strategy tailored to your specific goals and circumstances.
Leave a Reply