Bajaj Allianz Life Smart Pension offers flexible, market-linked retirement plan with tax benefits

Bajaj Allianz Life Insurance, a leading private insurer in India, has launched the Bajaj Allianz Life Smart Pension plan. This unit-linked, non-participating pension plan is designed to provide customers with greater control over their retirement planning. Starting with a policy term of just 10 years and a vesting age as early as 45, the plan aims to build a robust retirement corpus for lifelong income.

The pension plan allows customers to withdraw up to 60% of their accumulated corpus tax-free at vesting. Long-term investors benefit from loyalty additions and a vesting booster after the 15th policy year. Customers further enjoy the flexibility to defer the vesting date to better align with their personal retirement goals.

A notable feature is the Bajaj Allianz Life Nifty 200 Alpha 30 Index Pension Fund, which invests in high-alpha stocks aiming for superior returns. This fund employs Jensen’s Alpha to select 30 stocks from the Nifty 200 universe, offering diversification and market-linked growth potential. Additionally, customers can choose among five other fund options to align with their risk-reward preferences.

In terms of liquidity, the plan offers the flexibility to partially withdraw from the retirement corpus in the event of significant life changes or critical illness. A death benefit is included, assuring a minimum of 105% of the total premiums paid as of the date of death.

Further enhancing flexibility, the plan allows unlimited free switches between funds at no additional cost, enabling customers to adapt their investment strategies as market conditions change. This flexibility is crucial for investors looking to optimise returns in a dynamic financial environment.

The plan is designed to support higher returns through market-linked growth opportunities, catering to those seeking to strengthen their financial security post-retirement. Tax benefits are applicable on premiums paid and benefits received, in line with prevailing tax laws.

“Globally, retirees have access to social security as a second income stream whereas most Indians have just the savings from PF. Yet, focused retirement planning is still not a priority for a large segment of the population. Our flexible market-linked pension plan will enable individuals who are seeking greater control over their financial security post-retirement. It allows them to invest for the long term, build a robust retirement corpus, and ensure a steady annuity through their golden years. At Bajaj Allianz Life, we continue to strengthen our retirement solutions portfolio, and this product is yet another step in that direction. It is aimed at meeting the changing needs of our customers, so they can pursue their life goals with confidence, even after retirement,” stated Tarun Chugh, MD & CEO, Bajaj Allianz Life Insurance.

Bajaj Allianz Life competes with major industry players like LIC, ICICI Prudential, and HDFC Life, each offering varied pension products. With its innovative features and customer-focused flexibility, the Bajaj Allianz Life Smart Pension plan is positioned to attract individuals prioritising personalised retirement planning solutions.

Investing in market-linked pension plans: Key points

Market-linked pension plans can help build a retirement corpus of up to Rs 5.32 crore in 20 years at an assumed 15% annual return, as per Policybazaar. These plans allow 60% tax-free withdrawals, while the remaining 40% is invested in an annuity to provide post-retirement income.

Advantages:

Power of compounding boosts long-term growth

60% of the corpus is tax-free on withdrawal

Annuity ensures a steady income after retirement

Disadvantages:

Returns depend on market performance and can vary

Funds are locked in, limiting liquidity

Annuity income is taxable and often yields lower returns