NPS and EPF still better bets than pension plans

Pension plans offered by life insurance companies haven’t gained momentum compared with the National Pension System (NPS), Employees’ Provident Fund (EPF) and other instruments, partly due to lack of liquidity and poor returns.

“The yields offered by most pension plans are also not competitive when compared to existing FD (fixed deposit) rates,” said Yashish Dahiya, Chief Executive of Policybazaar.com.

In immediate annuity plans, there is no liquidity as the entire corpus gets locked in and can’t be withdrawn in case of any emergency.

IRDAI had prescribed capital guarantees for all pension plans, banned partial withdrawal and made it mandatory for policyholders to buy annuities from the same insurer.

“Unlike NPS and EPF, there is no open market option available for policyholders investing in pension plans of insurance companies,” said Rajeev Kumar, Chief Financial Officer at Bharti Axa Life Insurance.