UNIT LINKED PENSION PLANS
Life expectancy having increased, we need to accumulate and invest funds during our 3 - 4 decades of the working life, for about 2 - 3 decades of retired life. This topic has been discussed in an article in the magazine “Outlook Money” in its Dec 15, 07 issue. All costs are going up, including those for health. Further, we need funds for completing our various tasks. We should have several sources to live a reasonable retired life. Unit-linked pension plans (ULPPs) have possibilities of higher growth. Here a portion of the premium is used for the person’s life coverage (or even without it also). After deducting for various charges the rest is converted to units. With the investment performance of the company, the NAV of the unit grows. At retirement time, the person gets some lump sum amount and rest, on per year basis for some years, or for the life. In the long term, he gets higher growth in investment. The performance of the investment is also known. Depending on market changes, he can also make changes. These are ideal for persons in the age group of 25-50 years. We must understand the available ULPPs, and make the right choice. Firstly, we must fix the age of retirement, for fixing the tenure of ULPP. Secondly, we may look for a plan without life cover. Thirdly, we may invest in a high equity exposure plan say 80-100 percent, and when nearing retirement, change over to a lower risk plan. Fourthly, in consultation with the insurance agent, we must see the option of minimum management and administration costs. Lastly, we must compare the performance of various funds, to compare the promises and performance. After this evaluation study, we can decide on our choice.