Budget wish list: Push for pension plans, zero GST on term policies In the latest budget released by the Indian Government, it announced the launch of term policies with zero GST, which will encourage people to buy term policies, and hence, eventually help the country to have a better GDP percentage for life insurance schemes. As annuity schemes in India have always been taxable, they have always been considered as an unattractive investment option. The government has thus, made a big move to make term insurance plans available at zero GST or at a minimum rate of 5% to deepen financial inclusion amongst the middle-class investors. There isn’t also much attention focussed towards the health & protection needs of the middle and lower income class individuals. Allowing tax deduction provisions for life & health insurance schemes under Section 80 will help address the needs of this class, which forms a major chunk of the country’s population.

Budget 2018: PMVVY Limit to Increase to 15 Lakh Under budget 2018, the Finance Minister of India has proposed the extension of scheme Pradhanmantri Vaya Vandana Yojana(PMVVY) till March, 2020. Moreover, it has also been proposed by the FM that the current limit of investment will increase to Rs 15 lakh from the pre-existing limit of Rs 7.5 lakh for every senior citizen. PMVVY is a government backed pension scheme that was introduced to secure the future of senior citizens in India. The scheme was launched on May 4th 2017 and was initially available for 1 year. The amount invested in PMVVY is known as purchase price. As per the pension plan option chosen by an individual i.e. (monthly, quarterly, yearly), the pension is provided as arrears starting from the end of the period chosen. Based on the amount invested, the maximum tenure of the policy is 10 years. The increase in the investment limit is proved to be beneficial to seniors.

TATA Steel Backed New Pension Plan to Be Joined By a Large Number of UK Workers A throng of 1,22,000 workers have signed a deal to switch to a new pension scheme backed by TATA Steel UK after they were affected by the end of the 15 billion pound pension scheme. According to the reports, it has been confirmed that approximately 97,000 members have indicated their shift from British English Pension Scheme to the New Plan by returning their option form, whereas, just 14% of the members chose to stick with the old pension scheme. As a part of the biggest pension conference conducted in the UK, the options form was distributed to around 1,22,000 scheme’s members. Among which 97,000 members filled the forms completely and returned them. TATA Steel UK has welcomed the outcome of the conference conducted as a positive choice. However, the spokesperson of the company has stated that much work is still required to deliver a secure future for their UK business.

Budget 2018 and the Financial Aid for Senior Citizens In his Budget speech 2018, Finance Minister Arun Jaitley focused on caring for the senior citizens. He announced various tax & related incentives to decrease the fiscal burden on people above 60 years of age and above. All these moves are very welcome since senior-citizens face rising health-care expenses and depend upon their income earned from interest & pension. From affording a 5-fold increment in the tax exemption limit on income earned from savings, recurring deposits and fixed deposits held with post offices and banks of Rs.50, 000, to eliminating the tax deducted at source on this income, budget 2018 offers well-deserved relief to senior citizens. This is done by leaving a more money in the hands of senior citizens savers who are totally dependent on earned interest to meet their day to day expenses. Another tax change is the offer to increase the yearly tax deduction limit for medical insurance premium or/and medical reimbursement to Rs. 50,000 for the elderly. An applause-worthy step is setting the ceiling for tax deduction for medical costs incurred on specific critical diseases to Rs. 1 lakh, regardless of the age of the senior citizen.

The Central Government Unwinds Atal Pension Plan Norms Payment banks and small finance banks can now offer the Atal Pension Yojana or APY. The Central government believes that such a move will considerably increase the coverage of the plan. The government is of the opinion that these banks will strengthen the current distribution channels of the APY scheme. As per the Ministry of Finance, this step will further help in boosting outreach to subscribers under the scheme. As of now, ten small finance banks and eleven payment banks have obtained licenses from RBI to initiate banking operations in India. Participation in Atal Pension Yojana helps in building a pensioned society and also provides viable fee revenue to banks by way of alluring incentives for mobilizing the scheme at the rate of Rs 120 to 150 per account. As per government reports, by the end of January 2018, more than 84 lakh subscriptions were registered under the scheme.

Indians Best at Retirement Planning: Survey, 2017 Indians resumed their position of best placed in retirement planning in a global survey conducted by Aegon Retirement Readiness Index (ARRI), in 2017. The superannuation survey was done among 15 countries. Aegon Retirement Readiness Survey 2017, was based on 6 parameters including - personal responsibility of the respondents, mindfulness, financial understanding and responsibilities, retirement planning, and income replacement. ARRI said that the report is not illustrative of the general population and is directed towards the medium and high-income earners across these cities. India ranks the highest on the ARRI score index with 7.6 score, among the 15 major economies of the world. US, Brazil, China and UK follow the trail with a score of 6.9, 6.4, 6.3 and 6.2 respectively. Spain (4.7) and Japan (5.1) scored the lowest on the index.

SeLFIES for India In a major decision taken by the Indian Government, it has decided to allocate a total of Rs 50 lakh crore for the infrastructure, in the budget released for the current financial year. At the same time, there are also certain provisions introduced in the budget to improve the life of retirees/senior citizens. “A life of dignity” comes with the confidence to ensure the income security of senior citizens in India. SelFIES (Standard of Living indexed, Forward-starting, Income-only Securities) is a long-term bond introduced to help retirees lead their pre-retirement lifestyle even after their retirement. Most of the times, part-time employees, people from low-income group, rural workers, etc. can’t save enough for their retirement due to the obvious lack of funds. SeLFIES will give them access to invest in low-cost, safe and liquid bonds issued by the Indian Government. Financial literacy rate in India is still relatively low; hence, SeLFIES is a welcoming change that will allow people to access their funds when they actually need it, eventually simplifying the process of retirement planning.

Plea against pension for ‘freedom fighter’ In a latest statement released by the Madurai Bench of the Madras High Court, the Madurai Bench has favoured an appeal to grant freedom fighter pension to a senior citizen. Earlier, the claimant, Govindarajulu, 91 years of age, was denied pension based on the fact that he was not able to fulfil the specified eligibility criteria for the requirement. According to the set criteria to claim freedom fighter’s pension, the claimant should already have attained the age of 18 at the time of her or his imprisonment. Also, s/he is required to submit a copy of jail records by the authorized committee. In an earlier judgement, Govindarajulu was denied pension, stating that he wasn’t able to submit relevant documents to specify his date of birth. In its statement, the Madras High Court has expressed regrets and apologized for the state’s insensitive approach toward the whole matter. In the latest statement released, Justice K Ravichandra Babu chided the system for its ‘bureaucratic dogmatism” and said that pension facility for freedom fighters is not a charity done by the government, but is a bestowal of honour for those who fought for our freedom. In the judgement released by the Madras High Court, the Tamil Nadu Government has been ordered to grant the pension for Govindarajulu in two weeks.

A Panel to Analyze Pension plan The Kerala state government is to appoint a ‘committee’ to analyze the socio-economic & legal significance of the CPS (Contributory Pension Scheme). The committee will analyze the effects of 2 facets of the CPS: the transfer of states’ funds to (private) fund managers and the co-occurring existence of 2 schemes in the state- the statutory schemes and the contributory schemes. An announcement was made by finance minister of Kerala Dr. T M Thomas Isaac in a reply to a Calling Attention motion put forward by MLA Mullakkara Ratnakaran. Mr. Ratnakaran demanded the establishment of a ‘commission’ for studying pension plans. Dr. Isaac has accepted Mr. Ratnakaran’s demand for specifying a time-duration for the committee to present its report. The committee members and schedule are yet to be announced later. As per the contributory pension scheme, a government employee contributes a decided percentage of his/her basic salary, it is then combined with the dearness allowance and an equal portion is contributed by the government. A pension fund manager will be entrusted with the same. The fund manager will invest the money in the shares and mutual funds.