To get the most from pension schemes, subscribers need to be aware of the factors that affect the size of the annuity (or pension amount). Annuity is basically the annual income the subscriber gets in return for a lump sum, or money s/he has saves in the pension fund. As per HDFC Life, an annuity is a contract for a steady income during retirement. There are two types of annuities: Immediate and Deferred. In the Immediate annuity, a person immediately starts receiving payments after doing an initial investment. This is suited for those approaching retirement. The Deferred Annuity accumulates money, instead of paying out to the subscriber immediately. 

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There are several factors affecting annuities. As per the pensionsanchay.org.in, the official financial literacy initiative of PFRDA, an insurer can provide more when the re-payment period is less. Or, an annuintant starting late can get a better rate. This is so because, the uncertainty and fluctuations, the insurer has to deal with, become less and for a smaller period. "Pension amounts available increases as your entry age in the Annuity plans increases...There is a direct correlation between the entry age and pension amount available- higher the entry age, higher is the pension amount," says the website. 

Secondly, the plan, in which the liability of the insurer is less after the death of the subscriber, provides better returns. The more the liability of the insurer, (say, towards the nominees, spouse and more) the lesser becomes the return. 

According to the Pension Sanchay website: "Plans where good annuity rates may not be available would be - annuity plans where there is return i.e. refund of the purchase price post death of annuitant/spouse/nominee, plans where payment of annuity/ pension extends beyond the life of the annuitant i.e. pension is payable to spouse and their nominee, plans where payment of annuity/ pension extends beyond the life of the annuitant i.e. pension is payable to spouse and then purchase price is returned to the nominee."

Some of the other factors affecting the pension include gender, the age of the spouse. Women are likely to get less money at the same entry age, because they are expected to live longer. 

In plans where the subscriber wants the pension to be payable to spouse, her age impacts the annuity rate and the available pension. 

Pension rate chart 

Sr No. Annuity Option Entry Age
30-39 40-49 50-59 60-69 70-79 80-84 85
1 Annuity payable for life 6.55% 6.89% 7.54% 8.79% 11.52% 17.33% 21.90%
2.a Annuity payable for 5 yrs and life thereafter 6.55% 6.89% 7.52% 8.70% 11.14% 15.11% 17.26%
2.b Annuity payable for 10yrs and life thereafter 6.54% 6.87% 7.45% 8.51% 10.30% 12.11% 12.67%
2.c Annuity payable for 15 yrs and life thereafter 6.53% 6.84% 7.37% 8.25% 9.34% 9.98% 10.09%
2.d Annuity payable for 20 yrs and life thereafter 6.51% 6.80% 7.27% 7.94% 8.48% 8.66% 8.68%
3 Annuity payable for life with ROC on death of annuitant 6.21% 6.25% 6.30% 6.38% 6.50% 6.69% 6.80%
4 Annuity payable for life increasing at 3% simple p.a. 4.69% 5.06% 5.75% 7.00% 9.70% 15.34% 19.83%
5 Annuity payable for life with 50% annuity payable to spouse on death of annuitant 6.44% 6.69% 7.16% 8.07% 10.01% 14.07% 17.27%
6 Annuity payable for life with 100% annuity payable to spouse on death of annuitant 6.33% 6.49% 6.81% 7.46% 8.84% 11.84% 14.26%
7 Annuity payable for life with 100% annuity payable to spouse on death of annuitant with ROC on death of last survivor 6.19% 6.21% 6.25% 6.30% 6.40% 6.53% 6.62%

*Source:pensionsanchay.org.in

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Pension calculation

The formula for calculating pension is:

Pension = Annuity rate x Pension Price. For example, suppose a 30-year-old person purchases pension for Rs 50 lakh, the return for him would be Rs 50 lakh x 6.55% (as per the rate mentioned in the chart) = Rs 3,27,000 per annum.