Pramerica Life Next Gen Pension Plan
Is the Pramerica Life NextGen Pension Plan really the smart way to grow a retirement corpus — or just another ULIP with long-term risks?
Is Pramerica Life NextGen Pension Plan your gateway to a secure, market-linked retirement — or just another ULIP that demands both patience and risk tolerance?
Can the Pramerica Life NextGen Pension Plan deliver meaningful market-linked growth and life cover — or does the “pension” tag mask a high-risk investment?
This article takes a closer look at how the plan works and helps you assess whether it’s the right fit for your retirement goals.
What is the Pramerica Life NextGen Pension Plan?
What are the features of the Pramerica Life NextGen Pension Plan?
Who is eligible for the Pramerica Life NextGen Pension Plan?
What are the benefits of the Pramerica Life NextGen Pension Plan?
What are the investment strategies and fund options in the Pramerica Life NextGen Pension Plan?
What are the Charges of the Pramerica Life NextGen Pension Plan?
Grace Period, Discontinuance and Revival of the Pramerica Life NextGen Pension Plan
Free Look Period for the Pramerica Life NextGen Pension Plan
Surrendering the Pramerica Life NextGen Pension Plan
What are the advantages of the Pramerica Life NextGen Pension Plan?
What are the disadvantages of the Pramerica Life NextGen Pension Plan?
Research Methodology of Pramerica Life NextGen Pension Plan
Benefit Illustration – IRR Analysis of Pramerica Life NextGen Pension Fund
Pramerica Life NextGen Pension Plan Vs. Other Investments
Pramerica Life NextGen Pension Plan Vs. Pure-term + PPF/Equity Mutual Fund
Final Verdict on Pramerica Life NextGen Pension Fund
The Pramerica Life NextGen Pension Plan is a Unit Linked Non-Participating Individual Savings Pension Plan. It is designed to help you build your retirement fund with market-linked returns. This plan helps you achieve your long-term goals with confidence.
| Minimum | Maximum | |
| Age at Entry | 18 years | 65 years |
| Vesting Age | 40 years | 80 years |
| Policy Term | 10 years | 55 years |
| Premium Payment Term | Limited Pay/Regular Pay – 5 years to 40 years | |
| Premium (₹) | Annual – 30,000 Monthly – 2,500 | No limit, subject to Board-approved Underwriting Policy |
| Sum Assured | 105% of Total Premiums Paid | |
| Premium Payment Mode | Annual & Monthly | |
| Top-up Premium | ₹ 10,000 | No limit, subject to Board-approved Underwriting Policy |
| Top-up Sum Assured | 105% of Top-up Premium | |
In case of the unfortunate demise of the Life Insured during the Pramerica Life NextGen Pension Plan Policy Term, provided all due premiums are paid, the following benefits shall be payable:
The Death Benefit shall be the higher of
Utilisation of Death Benefit:
The Nominee/claimant will have the following options:
Vesting Benefit is the Fund Value (including Top-Up fund value, if any), as on the vesting date, on survival of the Life Assured.
On the date of vesting, the Pramerica Life NextGen Pension Plan policyholder shall have an option to extend the vesting period by at least one Policy year.
Utilisation of Vesting Benefit:
The policyholder will have the following options:
Guaranteed Additions is defined as a percentage of Premium Paid, and it is allocated to the fund at the time of Premium Allocation for the first policy year only, which results in a higher allocation for the Pramerica Life NextGen Pension Plan Policyholder.
On Survival of the Life Insured till the end of the Policy Term, an amount equal to the total of all the Mortality Charges deducted during the Policy Term (including Mortality Charge deducted on Top-up Sum Assured as applicable) will be added to the Total Fund Value (Base Fund value plus Top Up Fund value) at the Vesting Date provided the Policy is in force and all due premiums are paid in full.
At inception, the Policyholder can choose one of the following investment strategies:
Within the Defined Portfolio Strategy, the Policyholder can choose to invest with or without the Systematic Transfer Plan Option. Once opted in, the investment strategy will continue throughout the Pramerica Life NextGen Pension Plan policy term
Under this option, you can choose to invest in any of the funds available (except the discontinuance fund or Liquid Fund) in proportion to your choice.
Within the Defined Portfolio strategy, you also have the option to select the Systematic Transfer Plan (STP) option, for which the Liquid Fund will be made available to you.
You can switch money among these funds using the switch option. You can choose from six funds to invest your money. If you opt for more than one fund, the minimum investment in any fund should be at least 1% of the Annual Premium. The funds and fund objectives are as follows:
| S.no | Fund Name | Asset Allocation | Risk Profile | ||
| Equity & Equity-related instruments | Govt. Securities & Corp. Bonds | Money market instruments | |||
| 1 | Pension Debt Fund | 0 | 60-100% | 0-40% | Low |
| 2 | Pension Dynamic Equity Fund | 0=100% | 0 | 0-100% | High |
| 3 | Pramerica Secure Balanced Pension Fund | 65-75% | 25-35% | 25-35% | Medium |
| 4 | Pramerica Pinnacle Growth Pension Fund | 75-85% | 15-25% | 15-25% | High |
| 5 | Pramerica Flexi Edge Pension Fund | 85-100% | 0 | 0-15% | High |
| 6 | Pramerica Nifty Midcap 50 Correlation Pension Fund | 90-100% | 0 | 0-10% | High |
| Liquid Pension Fund | 0 | 0 | 100% | Low | |
| Discontinued Pension Fund | 0 | 60-100% | 0-40% | Low | |
Systematic Transfer Plan (STP)
With STP, you can invest a specific amount at monthly intervals, which gives you the advantage of Rupee Cost Averaging.
You can buy more units when markets are down and fewer units when markets are up, thereby reducing the average unit purchase cost. You can choose STP only for 12 months; an option would be available to policies wherein the premium is to be paid annually.
Considering the ever-changing financial needs as per the different life milestones, we offer a life stage-based investment strategy wherein the investments are distributed between the Pension Dynamic Equity Fund and the Pension Debt Fund, with their proportions varying as per the different life stages.
At inception, the funds will be distributed between two funds, the Pension Dynamic Equity Fund & Pension Debt Fund.
As and when the next milestone is achieved, the funds will be redistributed according to the attained age (age bands) as given in the following table:
| Age as on the last birthday and the last policy anniversary | Pension Debt Fund | Pension Dynamic Equity Fund |
| Up to 25 | 15% | 85% |
| 26 – 30 | 20% | 80% |
| 31 – 35 | 25% | 75% |
| 36 – 40 | 30% | 70% |
| 41 – 45 | 40% | 60% |
| 46 – 50 | 50% | 50% |
| 51 – 55 | 60% | 40% |
| 56 and above | 70% | 30% |
NIL; there are no Premium Allocation Charges in this product.
NIL; there are no Policy Administration charges in this product.
A Mortality charge will apply to the Sum at Risk. It will be deducted monthly by cancellation of units from the unit account.
Annual charges per 1000 sum at risk for a healthy male are as follows
| Attained Age of Life Insured | 20 | 30 | 40 | 50 |
| Mortality charge | 1.0164 | 1.0747 | 1.848 | 4.8796 |
| S.no | Fund Name | Fund Management Charges |
| 1 | Pension Debt Fund | 1.20% |
| 2 | Pension Dynamic Equity Fund | 1.35% |
| 3 | Pramerica Secure Balanced Pension Fund | 1.35% |
| 4 | Pramerica Pinnacle Growth Pension Fund | 1.35% |
| 5 | Pramerica Flexi Edge Pension Fund | 1.35% |
| 6 | Pramerica Nifty Midcap 50 Correlation Pension Fund | 1.25% |
| Liquid Pension Fund | 1.20% | |
| Discontinued Pension Fund | 0.50% |
NIL; there is no Discontinuance charge in this product.
Inference from the Charges: These charges act as additional costs for investors. Since some charges continue throughout the Pramerica Life NextGen Pension Plan policy term, they gradually erode returns over time, reducing overall profitability.
In case you do not pay the Premium by the due date, you will have a grace period of 30 days in case of non-monthly mode policies and a 15-day grace period in case of monthly mode policies from the due date to pay the Premium.
Discontinued during the first five Policy years (Lock-in Period): the fund value, after deducting the applicable discontinuance charges, shall be credited to the Discontinued Pension Fund, and the risk cover and rider cover, if any, shall cease.
Discontinued after the first five Policy years: the policy shall be converted into a reduced paid-up, where the Sum Assured will be 105% of Total Premiums Paid.
The Pramerica Life NextGen Pension Plan policy shall continue to be in reduced paid-up status, without any rider cover, if any.
You have the option to revive your discontinued policy within three years from the date of the first unpaid premium.
You will have a period of 30 days from the date of receipt of the Policy document to review the terms and conditions of the Pramerica Life NextGen Pension Plan Policy, and if you disagree with any of these terms and conditions, you have the option to return the Policy.
The policy will acquire surrender value immediately from the first policy year
If the Pramerica Life NextGen Pension Plan Policyholder opts for surrender within the first five Policy Years, the Fund Value, after deducting the applicable discontinuance charges, shall be credited to the Discontinued Pension Fund, and the risk cover and rider cover, if any, shall cease.
The proceeds from the Discontinued Pension Fund shall be paid at the end of the lock-in period as the Surrender Value. Only fund management charges shall be deducted from this fund during this period.
If the Policyholder opts for surrendering the policy after the completion of the fifth policy year, the Fund Value will be paid.
The Pramerica Life NextGen Pension Plan is designed to help you build a retirement corpus through regular contributions, with the goal of providing a steady income after retirement.
However, there are restrictions on how the proceeds can be utilised. Let’s examine the plan’s return potential based on the figures mentioned in the Pramerica Life NextGen Pension Plan policy brochure
A 35-year-old male invests ₹1 lakh annually in the Pramerica Life NextGen Pension Plan for a policy term of 15 years and a premium payment term of 10 years.
The benefits vest at the end of the policy term, at which point the accumulated corpus must be partially or fully used to purchase an annuity.
| Male | 35 years |
| Sum Assured | ₹ 10,50,000 |
| Policy Term | 15 years |
| Premium Paying Term | 10 years |
| Annualised Premium | ₹ 1,00,000 |
The policy projects two hypothetical fund growth scenarios: 4% p.a. and 8% p.a. These figures are only indicative and not guaranteed, as the actual returns depend on market performance.
| At 4% p.a. | At 8% p.a. | ||||
| Age | Year | Annualised premium / Maturity benefit | Death benefit | Annualised premium / Maturity benefit | Death benefit |
| 35 | 1 | -1,00,000 | 10,50,000 | -1,00,000 | 10,50,000 |
| 36 | 2 | -1,00,000 | 10,50,000 | -1,00,000 | 10,50,000 |
| 37 | 3 | -1,00,000 | 10,50,000 | -1,00,000 | 10,50,000 |
| 38 | 4 | -1,00,000 | 10,50,000 | -1,00,000 | 10,50,000 |
| 39 | 5 | -1,00,000 | 10,50,000 | -1,00,000 | 10,50,000 |
| 40 | 6 | -1,00,000 | 10,50,000 | -1,00,000 | 10,50,000 |
| 41 | 7 | -1,00,000 | 10,50,000 | -1,00,000 | 10,50,000 |
| 42 | 8 | -1,00,000 | 10,50,000 | -1,00,000 | 10,50,000 |
| 43 | 9 | -1,00,000 | 10,50,000 | -1,00,000 | 10,50,000 |
| 44 | 10 | -1,00,000 | 10,50,000 | -1,00,000 | 10,50,000 |
| 45 | 11 | 0 | 10,50,000 | 0 | 10,50,000 |
| 46 | 12 | 0 | 10,50,000 | 0 | 10,50,000 |
| 47 | 13 | 0 | 10,50,000 | 0 | 10,50,000 |
| 48 | 14 | 0 | 10,50,000 | 0 | 10,50,000 |
| 49 | 15 | 0 | 10,50,000 | 0 | 10,50,000 |
| 50 | 12,86,853 | 19,39,607 | |||
| IRR | 2.41% | 6.35% | |||
At 4% growth, the vesting benefit is ₹12.86 lakhs, resulting in an IRR of 2.41% as per the Pramerica Life NextGen Pension Plan maturity calculator.
At 8% growth, the vesting benefit is ₹19.39 lakhs, translating to an IRR of 6.35% as per the Pramerica Life NextGen Pension Plan maturity calculator.
It’s important to note that these IRRs are only theoretical because the accumulated corpus must be converted into an annuity, and annuity rates are not guaranteed—they vary based on market conditions at the time of purchase.
This mandatory conversion significantly limits liquidity and flexibility.
While the plan ensures annuity purchase, it restricts your ability to use the corpus for personal goals or alternative investments.
Overall, given its limited flexibility, restricted access to funds, and modest return potential, the Pramerica Life NextGen Pension Plan may not be the most efficient option for retirement planning.
The Pramerica Life NextGen Pension Plan limits how you can utilise your accumulated retirement corpus.
To overcome this restriction, a more flexible and return-oriented approach is to separate insurance and investment components. This alternative strategy offers both adaptability and potentially higher returns.
Using the same parameters as the previous example, let’s compare the outcomes:
A ₹10.5 lakh pure-term life insurance policy costs ₹5,900 annually for a 15-year term. The remaining ₹94,100 per year can be channelled into investment options — either PPF (debt) or an Equity Mutual Fund (equity).
| Pure Term Life Insurance Policy | |
| Sum Assured | ₹ 10,50,000 |
| Policy Term | 15 years |
| Premium Paying Term | 10 years |
| Annualised Premium | ₹ 5,900 |
| Investment | ₹ 94,100 |
| Term Insurance + PPF | Term insurance + Equity Mutual Fund | ||||
| Age | Year | Term Insurance premium + PPF | Death benefit | Term Insurance premium + Equity Mutual Fund | Death benefit |
| 35 | 1 | -1,00,000 | 10,50,000 | -1,00,000 | 10,50,000 |
| 36 | 2 | -1,00,000 | 10,50,000 | -1,00,000 | 10,50,000 |
| 37 | 3 | -1,00,000 | 10,50,000 | -1,00,000 | 10,50,000 |
| 38 | 4 | -1,00,000 | 10,50,000 | -1,00,000 | 10,50,000 |
| 39 | 5 | -1,00,000 | 10,50,000 | -1,00,000 | 10,50,000 |
| 40 | 6 | -1,00,000 | 10,50,000 | -1,00,000 | 10,50,000 |
| 41 | 7 | -1,00,000 | 10,50,000 | -1,00,000 | 10,50,000 |
| 42 | 8 | -1,00,000 | 10,50,000 | -1,00,000 | 10,50,000 |
| 43 | 9 | -1,00,000 | 10,50,000 | -1,00,000 | 10,50,000 |
| 44 | 10 | -97,500 | 10,50,000 | -1,00,000 | 10,50,000 |
| 45 | 11 | -500 | 10,50,000 | 0 | 10,50,000 |
| 46 | 12 | -500 | 10,50,000 | 0 | 10,50,000 |
| 47 | 13 | -500 | 10,50,000 | 0 | 10,50,000 |
| 48 | 14 | -500 | 10,50,000 | 0 | 10,50,000 |
| 49 | 15 | -500 | 10,50,000 | 0 | 10,50,000 |
| 50 | 19,70,713 | 29,85,264 | |||
| IRR | 6.51% | 10.54% | |||
PPF (Public Provident Fund)
After 15 years, the PPF corpus grows to ₹19.70 lakhs, delivering an IRR of 6.51%. While the returns are similar to the Pramerica Life NextGen Pension Plan, PPF offers complete access to the maturity amount — without the annuity purchase restriction.
Equity Mutual Fund
After 15 years, the pre-tax corpus amounts to ₹32.59 lakhs. Post-tax (after accounting for capital gains tax), the final corpus stands at ₹29.85 lakhs, providing a post-tax IRR of 10.54% — far superior to the returns from the Pramerica Life NextGen Pension Plan.
| Equity Mutual Fund Tax Calculation | |
| Maturity value after 15 years | 32,59,444 |
| Purchase price | 9,41,000 |
| Long-Term Capital Gains | 23,18,444 |
| Exemption limit | 1,25,000 |
| Taxable LTCG | 21,93,444 |
| Tax paid on LTCG | 2,74,181 |
| Maturity value after tax | 29,85,264 |
This alternative investment strategy not only generates a higher corpus but also offers greater flexibility and control over your funds.
These advantages are missing in the Pramerica Life NextGen Pension Plan, making the separate insurance-and-investment approach a smarter and more efficient choice for retirement planning.
The Pramerica Life NextGen Pension Plan combines elements of savings and insurance, but its structure differs from traditional policies that offer a lump sum maturity benefit or regular survival income.
Instead, this plan is designed primarily to accumulate a retirement corpus. The vesting benefit reflects the accumulated value meant to generate post-retirement income — however, the plan itself does not provide regular income.
Importantly, the plan only covers the accumulation phase and excludes an annuity component.
Upon vesting, the accumulated corpus—either fully or partially—must be used to purchase an annuity at the prevailing market rates, and the annuity amount is not guaranteed and it also has a high agent commission.
Since the returns are market-linked, the plan carries a significant level of investment risk. Moreover, multiple charges and restrictions on fund accessibility further diminish its appeal as an effective retirement planning solution.
Retirement planning requires a personalized and flexible approach. This insurance-cum-savings plan may not adequately support your post-retirement financial needs.
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