Once popular, now forgotten, pension plans offered by life insurance companies may become attractive once again if the latest product regulation draft by the Insurance Regulatory and Development Authority of India (Irdai) is implemented. The draft makes the design of unit-linked pension plans (ULPPs) more flexible and puts it squarely in competition with the National Pension System (NPS). But an important drawback remains: ULPPs continue to be more expensive than NPS. We tell you how the two compare.
On product structure
ULPPs are much like unit-linked insurance plans (Ulips), except that they do not offer insurance currently. Your money gets invested in the funds of your choice and just like Ulips, ULPPs come with a lock-in of five years.