Securing Hannav Ledger...
Securing Hannav Ledger...
Glossary
Annuity is a financial product providing regular periodic payments, typically purchased at retirement from a lump sum with an insurer.
Annuity turns a big retirement lump sum into monthly pension cheques for life or fixed years.
Types include immediate, deferred, life, joint life, and return of purchase price. NPS mandates partial annuity purchase. Taxation: portion of each payment may be exempt as return of principal; interest component taxable. Rates depend on age and prevailing yields.
At 60, purchase ₹50 lakh immediate annuity at 6.5% — receive roughly ₹32,500 monthly for life. Spouse joint-life option reduces payout but protects survivor.
Annuity guarantees lifetime income but locks capital. SWP offers flexibility and potential growth with market risk and no longevity guarantee.
Yes, pension/annuity income generally taxed at slab rates. Exemption on commuted pension may apply in specific cases.
On superannuation, minimum 40% of NPS corpus must purchase annuity unless withdrawal amount is ₹5 lakh or below per PFRDA rules.