Study on Annuity Schemes in Investment Markets in Indi
Submitted by: Raam
Roll No.: 245040356 | University Roll No.: 24025504350
Course: BCom (H), Sec D, Semester 3
Submitted to: Associate Professor Dr. Meghna Malhotra
Presentation Index
1 Introduction to Annuities 6 Benefits & Considerations
2 Types of Annuity Schemes 7 Regulatory Framework
3 Investment Markets in India 8 Challenges in the Annuity Market
4 Annuity Schemes in India 9 Future Aspects
5 Alternative Investment Options 10 Conclusion
Introduction to Annuities
Financial planning is critical amidst rising life expectancy
and healthcare costs in India.
Traditional family support systems are diminishing,
increasing the need for organized financial products.
Annuities, offered by insurance providers, assure a series
of payments for a set duration or for life, offloading
longevity and market volatility risks.
The Indian annuity market is expanding due to
demographic shifts, economic transformation, and policy
changes, with diverse schemes for varying risk appetites.
Types of Annuity Schemes
Immediate Annuity Deferred Annuity Fixed Annuity
Payments start almost immediately Payouts begin after a chosen Offers fixed payments at regular
after a lump sum.Ideal for those deferment period.Suitable for intervals.Appealing to risk-averse
nearing or in retirement, needing young/middle-aged individuals investors seeking stability, though
instant income. saving for future income. vulnerable to inflation.
Variable Annuity Life Annuity (Single Life)
Payments tied to underlying investment Payments continue until the annuitant's death.Maximizes
performance.Higher potential returns, suitable for individual payouts, no provision for beneficiaries.
Indian Investment
Markets & Annuity
Growth
The Indian investment market is vast and evolving,
offering diverse instruments like equities, bonds, mutual
funds, and pension products.
Driven by economic liberalization and technology, it's one
of Asia's fastest-evolving investment centers.
Post-2000 insurance market liberalization brought private
players (HDFC Life, ICICI Prudential, SBI Life), increasing
competition and product innovation.
Demand for annuities is spurred by retirement planning
awareness and government schemes like NPS, with
increasing private sector adoption.
Annuity Schemes in
India
• The National Pension System (NPS) is a voluntary,
government-backed retirement plan requiring 40% of savings to
be used for annuities at retirement.
• The Atal Pension Yojana (APY) targets unorganized sector
workers, offering fixed government-guaranteed pensions but
with limited flexibility.
• The LIC Jeevan Akshay VII is an immediate annuity plan from
LIC, providing multiple income options and backed by LIC’
market credibility.
• The HDFC Life Pension Guaranteed Plan offers lifetime
guaranteed income with flexible payout options.
• The ICICI Pru Immediate Annuity provides instant annuity
payments after a lump-sum investment with multiple
customizable choices.
• The SBI Life Saral Pension is a straightforward plan ensuring
steady lifetime income with simple features.
Alternative
Options Investment
• Equity-Linked Pension Plans – Invest partly in
equities (e.g., ULPPs) to provide higher, market-linked
returns along with steady income.
• Debt Instruments within Pension Funds – Allocate
funds to government/corporate bonds for stability and
predictable fixed income.
• Balanced/Hybrid Pension Plans – Mix of equity and
debt (40–60% equity) to balance growth and security.
• Real Estate-Linked Retirement Plans – Indirect
exposure to property/infrastructure projects for inflation
protection and long-term value growth.
• Gold-Linked Pension Options – Exposure to gold ETFs
or sovereign gold bonds to hedge against inflation and
market volatility.
Benefits of Annuity Schemes
Guaranteed Income Longevity Protection
Provides regular, predictable income for financial Payments last for life, safeguarding against
stability. outliving savings.
Financial Independence Tax Benefits
Reduces reliance on family for post-retirement Contributions may be tax-deductible under
expenses. Section 80CCC and 80C.
Flexibility Market Protection
Various options available (joint life, increasing, Fixed annuities are immune to market volatility.
return of purchase price).
Challenges in the Annuity Market
Low Annuity Rates Inflation Risk Taxation of Income
Payouts tied to low bond yields, Fixed payouts erode purchasing Annuity income is fully taxable,
often insufficient for urban living. power; inflation-indexed options reducing overall benefit for
are rare. higher earners.
Lack of Liquidity Low Financial Literacy
Limited withdrawal options, restricting access to Lack of awareness and misunderstanding of annuity
funds during emergencies. benefits.
LIC Jeevan Akshay Yojana
Eligibility for LIC Jeevan Akshay VII :
• Entry Age Requirements
• Primary: 30–85 years (up to 100 for Option
F)
• Secondary (Joint Life): 25–85 years
• Eligible relationships: spouse, lineal
ascendant/descendant, sibling
• Investment Threshold
• Minimum: ₹1 lakh (₹10 lakh if aged 25–29)
• No maximum limit; incentives available for
larger sums
• Payment Flexibility & Access
• Annuity payouts: monthly/quarterly/half-
yearly/annually
• No medical exam needed
• Purchasable both online and offline through
LIC channels
Regulatory framework
• Multi-Regulator Oversight: Annuities
are governed by IRDAI, PFRDA, SEBI, and
RBI, each ensuring stability,
transparency, and investor protection.
• IRDAI: Regulates insurance-based
annuities (product approval, solvency,
disclosures, consumer protection).
• PFRDA: Governs NPS & APY, mandates
annuitization, ensures transparency, and
regulates intermediaries.
• SEBI: Oversees mutual fund–linked and
market-driven annuities; promotes
investor awareness.
• RBI: Influences annuity returns via
monetary policy; regulates banks’ role in
pension distribution; ensures smooth
payment systems.
• Taxation: Contributions enjoy tax
deductions (Sec. 80C, 80CCC, 80CCD),
but annuity income is taxable.
Future of Annuities in India
India's demographic shift towards an older population will
significantly boost annuity demand, as traditional support systems
decline.
Economic growth and rising disposable incomes will expand the
market for retirement products, with increasing financial
awareness among urban professionals.
Regulatory reforms by IRDAI and PFRDA aim to streamline
products, enhance transparency, and foster innovation, including
inflation-linked options.
Product innovation will focus on inflation-linked, market-linked,
hybrid, and joint annuities, alongside personalized solutions.
Digitalization and AI will make annuities more accessible,
transparent, and customized through online platforms and data
Conclusion
Annuity schemes are pivotal for retirement planning in India,
offering security and independence amidst changing societal
structures.
Despite challenges like low rates and liquidity, a robust
regulatory framework, demographic shifts, and technological
advancements signal a promising future
Increased awareness, flexibility, and inflation-indexed products
are key to annuities becoming a central pillar of India's
retirement security.
