POSTED BY December 13, 2013 8:23 pm COMMENTS (6)
ONI have two pension plans:
I am wondering whether to surrender / discontinue the above two pension plans and invest differently instead, as going by the returns these seem a waste of money. What do you recommend? Does the current fund position of the two plans warrant withdrawal or should I continue to remain invested? If you do recommend I surrender the HDFC plan, should I do it now or wait for the stock market to rise?
Does it make sense to surrender these two pension plans and invest in PPF + mutual funds /SIP? My age is 45 and having paid off my housing loan recently I don’t have much savings to speak of. I think I should look at a safety:risk ratio of 70:30 (or whatever you recommend). I only recently have started a PPF and there are very small funds there.
Your recommendations are much welcome and awaited. Thanks for the sterling service you’re doing to the general investing public.
2021 © Jagoinvestor.com All Right Reserved
Thank you Ashal.
Sincerely,
Swapnil
Dear Swapnil, for traditional policies, it’s 5Y. For ULIPs, it’s 3Y.
Thanks
Ashal
Dear Ashal,
“if surrender happens after 5Y, whole amount is tax free. before 5Y, whole amount is taxable”
Is this is applicable to all life insurance policies?
Thanks,
Swapnil
Dear Gaurav, in case of Tarang, if surrender happens after 5Y, whole amount is tax free. before 5Y, whole amount is taxable.
In case of Pension plan, all the surrender value is taxable.
Thanks
Ashal
Dear Gaurav, the LIC TARANG is not a pension plan. So you can withdraw from it, after completing 5Y to receive the amount tax free.
In case of HDFC pension plan, the surrender value is taxable in the year of receipt. Are you ready for it?
Thanks
Ashal
Dear Ashalanshu
Thanks for your reply.
In case of Tarang, the total surrender value would be less than the amount invested. Does even this come under taxation?
In the case of HDFC, what amount is taxable — the entire surrender value, or the excess over the amount invested?