PROJECT REPORT

ON
“A STUDY OF RETIREMENT PLAN, INSURANCE SCHEME OFFERED BY LIC”
SUBMITTED TO
UNIVERSITY OF MUMBAI

IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE AWARD

OF DEGREE OF MASTER OF COMMERCE (ACCOUNTANCY)
PREPARED BY
SIDDHI A GHADGE
ROLL NO:96
M.COM PART-II (SEMISTER-IV)
UNDER THE GUIDANCE OF
PRINCIPAL DR. MRS ANITA MANNA

K.M AGRAWAL COLLEGE OF ARTS, COMMERCE & SCIENCE

KALYAN (W)
UNIVERSITY OF MUMBAI
2021-2022
 PROJECT REPORT
ON
“A STUDY OF RETIREMENT PLAN, INSURANCE SCHEME OFFERED BY LIC”
SUBMITTED TO
UNIVERSITY OF MUMBAI

IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE AWARD OF

DEGREE OF MASTER OF COMMERCE (ACCOUNTANCY)
PREPARED BY
SIDDHI A GHADGE
ROLL NO:96
M.COM PART-II (SEMISTER-IV)
UNDER THE GUIDANCE OF
PRINCIPAL DR. MRS ANITA MANNA

K.M AGRAWAL COLLEGE OF ARTS, COMMERCE & SCIENCE

KALYAN (W)
UNIVERSITY OF MUMBAI
2021-22
 UNIVERSITY OF MUMBAI

K.M AGRAWAL COLLEGE OF ARTS, COMMERCE & SCIENCE

KALYAN (W)
Accredited at ‘A’ Grade by NACC

This is to certify that Miss. Siddhi Anant Ghadge Roll No. 96 a student of master of
commerce (Accountancy) Semester IV undertaken & completed the project work titled
“A STUDY OF RETIREMENT PLAN, INSURANCE SCHEME OFFERED BY LIC” during
the academic year 2021-22under the guidance of “Principal Dr. (Mrs.) Anita
Manna”submitted on 15th June 2021 in lieu of one subject for Master of commerce
(Accountancy), University of Mumbai.
It is her own work reported by her personal findings and true to the best of my
knowledge.

PROJECT GUIDE:
PRINCIPAL DR. (Mrs.) Anita Manna
EXTERNAL EXAMINER
 DECLARATION

I the under signed Miss Siddhi Anant Ghadge here by, declare that the work embodied in
this project work titled “A STUDY OF RETIREMENT PLAN, INSURANCE SCHEME
OFFERED BY LIC” forms my own contribution to the research work carried out under the
guidance of “Principal Dr. (Mrs.) Anita Manna is a result of my own research work
and has not been previously submitted to any other university for any other Degree to this or
any other university.

Wherever reference to have been made to previous work of other, it has been clearly indicated
as such and included in the bibliography.

I, here by further declare that all information of this document has been obtained and
presented in the accordance with academic rules and ethical conduct.

(Siddhi Anant Ghadge)

Certified by
 ACKNOWLEDGEMENT

To list who all have help me is difficult because they are so numerous and the depth is so
enormous.

I would like to acknowledge the following has been idealistic channels and fresh dimensions
in the completion of this project.

I take this opportunity to thank the University of Mumbai for giving me chance to do this
project.

I would like to thank my “Principal Dr. (Mrs.) Anita Manna, for providing the
necessary facilities requires for completion of this project.

I take this opportunity to thank our Coordinator “Principal Dr. (Mrs.) Anita Manna
For her moral and support and guidance.

I would also like to express my sincere gratitude towards project guide “Principal Dr.

(Mrs.) Anita Manna that guidance and care made the project successful.

I would like to thank my college library, for having provided various reference books and
magazines related to my project.

Lastly, I would like to thank each and every person who directly or indirectly helped me in the
completion of the project especially my parents and peers who supported me throughout my
project.
 EXECUTIVE SUMMARY:

This study is an explanatory research intended to establish the relationship between the
retirement planning behavior and the various factors affecting the retirement planning
behavior. A total of 100 working individuals in the age group of 26 to 55 years had
participated in this study. The objectives of this study are to examine the retirement planning
behavior of working individuals. This study contributes clear view through the symbolic
interaction theory and several past relevant empirical studies. The results identified several
significant variables in the prediction of working individual retirement planning behavior,
including age, education level and income level. The result of this study have implications for
working individuals to do early planning for retirement to enable them to have a strong
financial base after retirement.
 INDEX

CHAPTER CHAPTER NAME PAGE NO

NO

1 1.1 INTRODUCTION TO RETIREMENT PLANNING

1.2 IMPORTANCE TO RETIREMENT PLANNING

1.3 TYPES OF RETIREMENT PLANNING

1.4 PROCESS OF RETIREMENT PANNING

1.5 INTRODUCTION TO LIFE INSURANCE C

ORPORATION

1.6 ORGANIZATIONAL STRUCTURE TO LIC

1.7 RETIREMENT PRODUCTS RELATED TO LIC

2 2.1 INTRODUCTION TO RESEACH DESIGH

2.2 SAMPLING METHOD

2.3 OBJECTIVES OF STUDY

2.4 NEED AND SCOPE OF THE STUDY

2.5 HYPOTHESIS OF THE STUDY

3 Literature Review

4 Data analysis, Interpretation

5 Findings, Suggestions and Conclusion

6 Webliography and Bebliography

7 Annexure
 CHAPTER 1
INTRODUCTION TO RETIREMENT PLANNING

1.1Introduction:
Retirement planning in a financial context refers to the allocation of savings or revenue for
retirement. The goal of retirement planning is to achieve financial independence. The process
of retirement planning aims to:
 Assess readiness to retire given a desired retirement age and lifestyle, i.e. whether one has
enough money to retire.
 Identify actions to improve readiness to retire.
 Acquire financial planning knowledge
 Encourage saving practices
It involves an analysis of the various choices one can make today to help provide for
financial needs in future. The issues in pension reforms in the Indian context of an increasing
aging population:-
 The absence of social security for the majority Indians.
 The unfunded pension liability of the government.
 The need for incentives to the individuals to save for retirement.
While Indians, by nature and culture, have always saved or indulged in wealth creation, the
concept of retirement planning is a new change. In recent times people have realized the
importance of planning for their retirement years. There is a growing tendency of saving and
wealth creation for the retirement corpus.
Retirement planning is the process of insuring that there are sufficient financial resources to
provide a desired lifestyle in the retirement years.
Only 11% of the working populations in India have some form of social security for post-
retirement. Professionals, self-employed, unorganized sector workers and labourers do not
have any means of guaranteed post retirement income.
A retirement becomes a comprehensive component of the normative life cycle stage,
accepting the factor influencing retirement preparation activities. Most importantly family
income and
retirement planning is closely related. The early an individual starts investing for retirement
planning the more he or she gets the benefits in later age of their life’ by Turner et al (1994).

According to Lusardi and Mitchell (2007), ‘the retirement planners accumulate large wealth
than non-planners through saving, investment and probability of selling house to finance
retirement and others.’
Individual neglects the retirement planning because they have certain level of difficulty in
adjusting to retirement. The demographic, organizational place and health a better retiremen
planning Wong and Earl (2009).Elder and Rudolph (1999) stated that planning activities are
responsible for satisfaction even for those who goes for retirement decisions involuntarily
(either because of health problems or forced employer mandate). Marriage, health, education
level, whether the individual was forced to retire, and pre-retirement profession as well as the
retirement planning have bearing on the level of the retirement satisfaction. The individuals’
retirement planning tends to be higher than others if the level of household income is
accompanied with better health Kim, Kwon and Anderson (2005).
According to the life-cycle model, mortality risk influence both retirement and the desire to
higher wealth. Individuals with very low subjective probabilities of survival retire claims
social security very early while having high serving probability people delays to claim social
security, though the effects are not large Hurd, Smith, and Zissimopoulos (2004).
 History of Retirement Planning:
Retirement, or the practice of leaving one’s job or ceasing to work after reaching
a certain age, has been around since around the 18th century. Retirement as a
government policy began to be adopted by countries during the late 19th century and
the 20th century.

 18th century and prior

Prior to the 18th century, the average life expectancy of people was between 26
and 40 years. Due to this, only a small percentage of the population were reaching an
age where physical impairments began to be obstacles to working.

There had been a long practice beginning in the Roman empire to the modern
nation states of providing pensions to those who had served in the military.

Cotton Mather, the 18th century New England Puritan minister and author,
proposed that elderly people should be pleased with the retirement which you are
dismissed into.

 19th century
In 1883, the German chancellor, Otto Von Bismarck, in a maneuver against
Marxists who were burgeoning in power and popularity, announced that anyone 65
years old would pay a pension to them. It was the German Emperor, William I who, at
the bidding of Bismarck in 1881,introduced the proposal for retirement in a letter to
the Reichstag those who are disabled from work by age and invalidity have a well-
grounded claim to care from the state just like President Roosevelt, who would be
called a ‘socialist’ for introducing his New Deal welfare programs, Bismarck was
also labelled a ‘socialist’ for introducing these government program. To this, Bismarck
replied, “Call it socialism or whatever you like. It is the same to me.” The German
welfare program provided contributory retirement benefits and disability benefits.
Participants in the retirement system was mandatory and contributions were
taken from the employee, the employee and the government.

In the mid-1800s certain United States municipal employees, including

firefighters, police and teachers, started receiving public pensions. In 1875, the
American Express Company began to offer private pensions. By the 1920s, a variety
of American industries, from railroad to oil to banking, began offering pensions.

 20th century
 In this 1905 valedictory address to the Johns Hopkins Hospital, the eminent
Canadian physician William Osler expressed his conviction that a man’s best work
was done before he was forty years old, and that by age sixty, he should retire. He
called the ages between twenty five and forty the “15 golden years of plenty”. Workers
between ages forty and sixty were tolerable because they were “merely uncreative.”
But after age sixty the average worker was useless and should be put out to pasture.

Retirement as a concept began to be widely adopted in the United States after the
period of the Industrial Revolution, where numerous aging factory workers began to
show signs of aging: slowing down assembly lines, taking excessive sick days and
usurping the spots of more youthful, more profitable men with families to bolster.
Also, older workers brought about unemployment among the youthful population by
declining to resign. The Great Depression exacerbated things. Though retirement was
viewed by some as an essential adjustment, many among the older populace resisted
the idea of retirement.

By 1935, the idea that in order to get old individuals to quit working for pay was to
pay them enough to quit working became widespread. A Californian, Francis
Townsend, proposed a plan offering compulsory retirement at age 60. In return the
Legislature would pay benefits of up to $200 a month, a sum identical at the
opportunity to a full pay for a center pay laborer. In response to this, President
Franklin D. Roosevelt proposed the Social Security Act of 1935, which made

Eleanor Roosevelt said hopefully of retirees, “Old people love their own things even
more that young people do. It means so much to sit in the same chair you sat in for a
great many years. However, most resigned individuals wished they could work. The
issues was still intense in 1951, when the Corning Company assembled a round table
to make sense of how to make retirement more popular. At that gathering, the writer
and student of Eastern and Western cultures, Santha Rama Rau, observed that
Americans did not have the ability to appreciate doing nothing.

By 1910, Florida got to be distinctly available as a retirement destination to the white

collar class. Retirement communities started to show up in the 1920s and 30s. The
explosion of golf courses, and the onset of films and TV transformed having nothing
to do into a leisure time activity. The distribution in 1955 of Senior Citizen magazine,
which quickly went defunct, contained the first popular usage of the phrase “ senior
citizen”.

In 1999, The American Association of Retired Person dropped “Retired” from its
name and turned into “AARP Inc”. to reflect that its focus was no longer American
retirees.

 Present day
 According to the Mental Health Foundation, one in five of present-day retires
experiences depression. Those living alone because of bereavement or divorce are
more at risk. Physical health problems can also make people more vulnerable to
mental health issues. Recent studies have indicated that “retirement increases the
chances of suffering from clinical depression by around 40 percent, and of having at
least one diagnosed physical illness by 60 percent”. On the other hand, many
workers have adopted scaling back on their jobs at around 55 or 60, or even changing
careers, but still working for 15-20 more years.
 Evolution of retirement planning:

Retirement planning has gained a lot of importance lately and at least among the working
population, its significance has never been as greatly felt as it is now. Let us begin by tracing
the history of retirement planning in India. It was not long ago that the average Indian
workers, mainly the salary earning employees from the public sector enterprise, could safely
depend on a monthly pension post retirement.

 Defined benefit plans: pension was designed by employers on the lines of a defined benefit
plan for the purpose of retirement. The history of the Indian pension system dates back to the
colonial period of British-India. The Royal commission on Civil Establishment, in 1881, first
awarded pension benefits to the government employees. The Government of India acts
of1919and 1935 made further provisions. These schemes were later consolidated and
expanded to provide retirement benefits to the entire public sector working population. As per
the defined benefit plan, an assured monthly pension is paid, based on the last drawn pay, by
applying a pension factor as defined in the scheme rules. This in addition to a general
provident fund. It was offered by very few elite companies in the private sector.
Private sector employees, on the other hand, had access only to provident fund for
financial needs during retirement in the form of employee provident fund (EPF). The
employee provident fund (EPF) was introduced in1995. However, this forms part of EPF
deductions and a meager amount is provided. In addition to provident fund, workers in both
public and private sector companies are paid gratuity. The gratuity is paid to workers who
fulfill certain eligibility criteria such as minimum service period of five years.

 Defined contribution model: there were several factors which made it necessary for
employers including the government to consider moving from a Defined benefit scheme to a
defined contribution scheme, foremost among them, being the fall in interest rates which
meant that invested securities do not earn enough money to sustain the Pension plan. This
gave rise to huge liabilities which is ever increasing due to high inflation rates in India. The
employers pay a fixed contribution, such as 15% of salary and not obligated to pay a pre-
determined amount as pension. The pension payable is based on annuities purchased on the
corpus amount on retirement.
 Scenario before: it is needless to mention, that the average Indian worker referred in the
above context here, belongs to the formal organized sector which covers a mere 10% of the
population. The majority of the working population, around 90%, belongs to the unorganized
or informal sector where there is absolutely no structured mechanism for meeting their
retirement needs unlike the social security system prevalent in other countries including
United States. To put it simply, workers were left to fend for themselves.

In the context of the above, Public Provident fund widely known as PPF was introduced in the
year 1968, by the Indian Government as a savings and a tax-saving instrument. The PPF is a
statutory scheme with the objective of providing security during retirement for people
working in the unorganized sector and self-employed persons. The objective was also aimed
at mobilizing small savings for the government by offering reasonably good returns combined
with tax benefits. The scheme has a lock in period of 15 years and the scheme allows partial
withdrawal after completion of 5 years from the end of the year of opening the account. All
these have been existence for a good number of years.
 1.2 IMPORTANCE:
Retirement planning is a key element in the financial planning process and over financial
security over a long term. It involves a strategy of systematically accumulating funds for
retirement. It is more than simply deciding that an individual has enough money to retire on a
certain date. It is about planning how one will spend time accomplishing their goal. In simple
words retirement planning is important because:
a) People are living longer: advancement in medical science has resulted in increased life
expectancy of an individual. Similarly more infants will probably survive and get into
adulthood. More people who are 65 years old now live up to 80s or even 90s.
1) There is a strain on the administered pension system
2) Many employers no longer offer traditional pension plans
3) More corpus is required as inflation decreases the purchasing power of money

b) Inflation destroys power of money: inflation is the long term tendency of money to lose
purchasing power. It impacts retirement income planning in two ways:
1) By increasing the future costs of goods and services
2) By potentially eroding the value of assets set aside to meet those costs.

c) Of job insecurity: some of the reasons for job insecurity are:

1) Economic reasons of a recessionary economy, wherein costs cut are very rampant to keep an
organization floating. Many employees lose their jobs at the time of economic, recession or

the global depression.

2) New age employees are equipped with latest qualification and technology and offer high level
of energy in performing and executing work. This also churns employee workforce, in sectors
which continuously require fresh people for its growth.

d) Breakdown of joint family system: the Indian concept of joint families living under the
same roof has been practiced for long and had been a social norm for many centuries, but this
is fast changing. The benefit of a joint family was the shared environment and the feeling of
security. Joint family systems had a traditional value of supporting the elders in the family.
Today, there seems to be a growing tendency of the concept supporting them during
retirement.
 1.3 Types of Retirement Planning:
Broadly, there are three types of pension plans:

1. Insurance based pension plans

2. Non-insurance based pension plans
3. Government retirement schemes

1. Insurance based pension plans:

These pension plans are also called personal pension plan. These pension plan can
be availed through life insurers. Personal pension plans are not linked to your
employer
,therefore, your employer will not contribute to this

investment. There are three types of personal pension plans:

A. Deferred annuity plan:

To better understand a deferred annuity plan, let us break it down. ‘Deferred’
means ‘to delay’. Annuity means ‘fixed payout for the rest of the life’. Therefore, in a
deferred annuity plan, you decide a future date from when you want to start receiving
the annuity payments.

Example: A deferred annuity plan for a term (deferment period or vesting age) of 25
years will begin only after 25 years. It means you will contribute premiums for 25
years and receive annuity after 25 years. You can choose to pay ‘single premium’ or a
‘regular premium’.

In a deferred annuity plan, there are two phases:

Accumulation phase and income phase. At the end of accumulation phase, you can
withdraw 1/3rd of the corpus. You can claim tax benefits under section 80CCC for an
investment in annuity. However, the pension are taxed.

Deferred annuity plans are of two types:

i. Traditional retirement plan:

 The contribution or premiums paid towards these plans are mostly invested in debt
instruments like government securities. These are best suited for risk-averse investor
because of association low risks.

ii. Unit Linked Insurance Plans (ULIPs)

In ULIPs, you can choose to allocate your investment in different asset classes
like equity, debt, or a mixture of both. Based on your choice of asset class, you will
have to assume high or low risk. Based on the risk, you will earn high returns or
medium returns.

B. Immediate annuity plan:

In immediate annuity plans, you start receiving annuity payments immediately. For
this, you are required to pay a ‘lump sum premium’ after which you will start receiving
the annuity payments immediately or after a year of paying the premium. You can choose
the payment frequency to be monthly, quarterly, half-yearly or yearly.

C. The pension plan with or without life cover

Pension plan or retirement plan with life cover pay the sum assured to the
nominees if the policyholder dies during the accumulation stage. Pension plans
without life insurance cover, only pay the corpus built (contribution made) till date
with interest (as decided by the insurer) to the nominees in case the policyholder dies
during the B

2. Non-Insurance based pension plans:

Non-insurance based pension plan are better known as work-based pension plans.
These pension plans are set up by the employer to help employees save for retirement.
In this pension plan, both the employer and employee contribute to a retirement fund
on a monthly basis. Your contribution is directly deducted from the salary.

Work-based pension plan are of three types:

A. Defined benefit plan:

In this plan, the benefits are calculated based on factors like years of services left
and salary.
 B. Defined contribution or money purchase plan:
In this plan, the benefits are calculated based on employee’s and employers
monthly contributions and the performance of investments made with such money.

C. Hybrid plan:
This is a mixture of defined benefit and defined contribution pension plans.

3. Government retirement schemes:

The government has launched various retirement plans (pension plans) for social
security. Some of them are:

A. Employee’s Provident Fund (EPF):

EPF is available to all salaried employees subject to the rules laid down by
EPFO. In this case, the employer and employee contribute a percentage of
employee’s salary to the employee’s EPF account.

B. Public Provident Fund (PPF):

PPF is a popular long-term investment option which offers capital preservation
and attractive interest rates. PPF has the EEE status. A minimum of Rs 500 to a
maximum of Rs 1,50,000 can be invested each financial year.

C. National Pension Scheme (NPS):

Contribution to NPS can be made from a young age of 18. NPS offers
investors : the active choice and auto choice. In active choice, 50% of the
contribution is invested in equity, while the rest is in government and corporate
bonds. In auto choice, investment are made in a mix of equity, corporate and
government bonds, depending on your age.

You can claim a tax deduction under Section 80C and an additional deduction
under Section 80CCD (1B). On retirement, you can withdraw 60% of the corpus and
are required to buy an annuity with the remaining 40%. Out of the 60% withdrawn,
40% is tax-free.
 1.4 Process of Retirement Planning:
On retirement most people are concerned about outliving their assets and this can happen
if a retiree does not have enough assets saved. This is because no one knows how long he /she
will live. A good retirement plan should consider asset preservation and also employ several
options for the income continuation.

A. Estimating retirement needs and income: This is the first step in the retirement planning
process. It involves setting the retirement goals. Determine the age at which client wants to
retire and their desired financial position at retirement. Clients should be encouraged to set
realistic retirement goals and the age at retirement based on the current life stage position. The
younger the age at which a person wishes to retire, the more he or she must earn and save (or
invest) each year in order to achieve a given financial position. Once these goals have been
established:
1) An estimate of retirement income needs should be made.
2) While estimating, the person should state his or her retirement income objectives as a
percentage of current earnings and then adjust this amount to anticipate future inflation.
3) A planner can estimate how much should be set aside each year until retirement in order to
accumulate the funds needed to provide the desired retirement income.
4) The next step involves assessing the various sources of retirement income.
5) The final step comes in for the development of a well defined investment plan that is designed
to meet a specified financial goal
6) Sources of retirement income include public pension plans, life insurance cash values, and
individual retirement and saving plans.

B. Major obstacles to retirement planning: The three common mistakes that client make in
retirement planning are:
i. The start late
ii. They invest too little
iii. They invest conservatively.

Most do not start thinking about retirement, until they are in their 40s but by then it may be too
late to build the required retirement corpus. As a result:
1) They have to comprise with their lifestyle during retirement
2) People do not invest enough for retirement
3) The low investment results in low corpus to fund the retirement
4) People treat their retirement plans likes saving accounts rather than investment vehicles by
placing most or all of their retirement funds in low-yielding, fixed-income securities(like
NSC, post office MIS, bank FDs).
C. Employer-sponsored retirement and profit-sharing plans: Pension schemes provide many
benefits at and after retirement. Employed workers in the government sector or in large
undertakings are entitled to some or the other forms of pension benefits mandated by laws.
The retirement benefits available to workers are meant to provide for maintenance of their
retirement life beginning at retirement. If a covered worker dies, the surviving spouse and the
dependent children can receive survivor’s benefits from pension fund. These benefits include
a small lump sum payment followed by monthly pension payments. The spouse is eligible to
receive these benefits as long as he is alive based on the service contracts. Pension received is
usually insufficient to maintain pre-retirement standard of living. Families must plan to
supplement their retirement funds with income from other sources.

D. Vesting/ retirement age: it’s a very difficult decision to make. Deciding when to retire is
important, considering the fact that the vesting/ retirement age precisely determines the time
an individual has for accumulation of wealth as well as the longevity of the retirement period.
Put in other words, the farther the retirement age, better it is for accumulation of retirement
corpus, likewise an early retirement will put pressure on building of a retirement corpus.

E. Self-directed retirement programs: Government sector, large public sector undertakings,

and large companies employees are entitled to retirement benefit either based on their service
contract or because of provision of law, which makes it mandatory for employers to provide
for these benefits. But a large section of self-employed and workers of unorganized sector are
not entitled to any retirement benefit plans. They rely on self-funded retirement benefit plans,
like subscribing to the:
1) Pension plan of mutual fund and insurance companies
2) Public provident fund
3) National pension system
4) Small saving schemes.
F. Annuity payment options: annuities can be explained as a systematic inflow of fund at
constant interval. Regular inflow can either be the income of the capital asset or the
liquidation of an estate, designed to fund the expenses that are expected during retirement.
The period during which premiums are paid for the purchase of an annuity is called the
accumulation period and correspondingly, the period during which the annuity payments are
received is called the distribution period. Selection an appropriate annuity for retirement is
very important. There are many options available to receive annuity
1) Annuity for life
2) Annuity certain for a fixed numbers of years
3) Joint life annuity
4) Annuity for life with return of purchase price.
2 Financial Product to help you plan retirement:
Retirement planning in India is not an easy job at all. Rising inflation numbers, slowing
economy growth, love for gold and of course too many financial products do not make life
easy for any individual planning for retirement. Miss-selling of financial products by banks
and other financial institutions has only doubled the customer’s confusion.
Financial product for investment pre-retirement and post-retirement:

Financial
product

Post-
Pre-retirement
tireme
rent

Monthly
NPS income
scheme

Equities SCSS

Reverse
EPS
mortgage

ETF Pension plan

Liquid funds
Bonds
and FD's

 Pre-retirement investment products

NPS: New Pension Scheme or NPS is a perfect retirement product open to an
individual across the country. NPS has delivered annualised returns of around 10%
in the last 4 years.this scheme is mandatory for government employess. The fact that
fund managers of NPS scheme can also take exposure to equity and equity related
instruments is also a positivefor the scheme in the long run. It also provide tax
benefit in the form of deduction under section 80C. it is mandatory to purchase
annnuity worth 40% of the corpus accumulated through NPS at the time of
retirement. You can use these Pension
 calculators from Government of India to calculate basic pension, family pension and
pension cummuted.

1. EPF: Employee’s Provident Fund or EPF is the most popular retirement saving instrument in
India. Though it was introduced as a retirement product, not many see it so. The current rate
of return from EPF is fixed at 8.5% p.a. EPF offers deduction up to 1 lakh limit under section
80C; interest from EPF is tax free and withdrawal is also tax free if there is continuous service
of 5 years. Unlike NPS, EPS does not have any restrictions such as purchasing annuity.
However, it is advisable to stay invested in this scheme by opting for EPF transfer whenever
there is change of job. This would ensure that you reap the benefit of guaranteed returns along
with power of compounding.

2. Equities: no matter how many financial instrument you pick, none of them can match the
returns provided by equity related instruments such as stocks and mutual funds. While
investing in these instruments, make sure that you pic products for the long term i.e at least 10
years or more and your emotions are under control in this period. This doesn’t mean you have
to stick to the product evening through it is not performing well. Review the products every
year or switch to better product only is something has gone wrong fundamentally. Mutual
funds also give you an option of monthly SIP, where you can invest in a disciplined manner
for your retirement. Equity related products are also tax free after 1 year of investment.

3. ETF: Exchange traded funds, popularly known as ETF’s are also a good option for
accumulating corpus for retirement. In india, ETF can be done through Index or Gold. Index
ETF tracks the index and Gold ETF invests in Gold. You can purchase units of ETF by
purchasing Gold units every month. You would thus benefit from cost averaging rather than
investing in bulk and entail the risk of timing the markets.

4. Bonds: Bond is a type of loan taken from you by a company or government and giving you
some interest for the loan. There are flurry of bonds these days such as IIFCL tax free bonds,
HUDCO bonds, inflation bonds,etc. Many of these bonds are for 10 and 15 years duration.
Some of these bonds offer interest rates in excess of 10-12% p.a.
 Post- retirement investment products
1. Monthly income schemes: you would require schemes which provide regular income for
you. Such scheme are popularly known as Monthly Income Scheme(MIS). Post office also
provide MIS. You usually invest a lump sum and the corpus is invested in various instruments
to provide you monthly income. Post office interest rate of 8.4% p.a. and the maturity period
would be 5 years.

2. SCSS: Senior citizens saving scheme (SCSS) is just the kind of retirement product you
would need post retirement. This is the safest investment option for senior ctizens. You can
gain an interest of 9.2% p.a with a maturity period of 5 years. The account can be opened in
post office or any nationalised banks.

3. Reverse Mortgage: it is a wonderful option given to senior citizens for a regular source of
income. You can pledge your house with a bank to receive income from the bank regularly for
a set period of time. The amount received will depend on the valuation of the house and the
term opted. A recent ruling on this scheme has made the income received from house property
under this scheme totally tax free.

4. Pension plans: it is provided by insurance company as well as mutual funds. They would
invest a lump sum amount and provide you monthly income just as in the case of SSC or MIS.
Charges from insurance company provided pension or annuity plans are usually higher than
mutual fund provided ones.

5. Liquid funds or FD’s: the investment option given above do not give you proper liquidity.
As senior citizens, you might need to put some amount aside as an emergency. To make sure
that tis amount also earns decent returns, you can opt for liquid funds or fixed deposits of
varying tenures. Liquid funds are also tax efficient
3 Life Cycle of Retirement:

A. Pre working (beginning) No worries for retirement: at this juncture the individual is
looking to start his/her work life and does not have the worries of retirement at all. The person
is new to the business or employment world and is busy enjoying financial freedom. It is too
premature to expect a person to start planning for retirement at this level.

B. Working (consolidation) put retirement plan together: The individual is well established
in his field of choice and is now looking to move ahead. The individual enjoys enough
financial ability to start contributing to various important aspects like buying a house,
providing for children’s education, etc. various other factors take to the forefront at this point.
But it is imperative for the individual to start moving towards the retirement plan and avoid
financial dependence post retirement by starting today.

C. Nearing retirement (transition): start planning to enjoy implemented retirement plan.

Review all the available resources for retirement carefully as the possibility of growth of these
funds would taper with tapering ability towards risk. The individual must reassess exposure to
products like annuities for social security.

D. Post working (retirement) enjoys the fruits of retirement planning: the important decision
would be to stop working and lead a retired life. It is imperative that the person has made
enough reserves for medical assistance at the time of planning for retirement. The ability to
recuperate losses from investments, would be curtailed in a big way during this phase as there
might be an absence of a stable and continuous income via salary, etc. the retirement fund
would be the only available sources of income and hence it would be prudent to place them in
secured investments options.
4 National Pension System:
The National Pension System (NPS) is a voluntary defined contribution
pension system in India. National Pension System, like PPF and EPF (Exempt-
Exempt- Exempt) instrument in India where entire corpus escapes tax at maturity
and entire pension withdrawal amount is tax-free.
NPS started with the decisions of the Government of India to stop defined
benefit pensions for all its employees who joined 1 January 2004. While the
scheme was initially designed for government employees only, it was opened up
for all citizens of India between the age of 18 and 60 in 2009. In its overall
structure NPS is closer to 401(k) plans of the United States. Administered and
regulated by the Pension Fund Regulatory and Development Authority
(PFRDA).
On 10th December 2018, Government of India NPS an entirely tax-free
instrument in India where entire corpus escapes tax at maturity, the 40% annuity
also became tax-free. The contribution under Tier-II of NPS is covered under
Section 80C for deduction up to Rs. 1.50 lakh for income tax benefits, provided
there is a lock-in period of three years. The changes in NPS will be notified
through changes in The Income Tax Act, 1961, which is expected to happen
through the Finance Bill in 2019 Union budget of India. NPS is limited EEE to the
extent of 60%. 40% has to be compulsorily used to purchase an annuity, which is
taxable at the applicable tax slab.
Contributions to NPS receive tax exemption under Section 80C, Section 80CCC
and Section 80CCD(1) of Income Tax Act. Starting from 2016, an additional tax
benefit of Rs 50,000 under Section 80CCD(1b) is provided under NPS, which is
over the Rs 1.5 lakh exemption of Section 80C. Private fund managers are
important parts of NPS. NPS is considered one of the best tax saving instruments,
after 40% of the corpus was made tax-free at the time of maturity and it is ranked
just below equity-linked savings scheme.

5 Regulatory Framework:
In 1999 the Government of India commissioned a national project, to examine
policies related to old age income security in India. Based on the recommendations
of the OASIS report, the Government of India introduced a new Defined
Contribution Pension System for the new entrants to Central/State Government
 service, except to the Defence forces i. e. Army, Navy and Air-force, replacing the
existing system of the Defined Benefit Pension System.
On 23rd August 2003, the Interim Pension Fund Regulatory & Development
Authority (PFRDA) was established through a resolution by the Government of
India to “promote old age income security by establishing, developing and
regulating pension funds, to protect the interests of subscribers to schemes of
pension funds and for matters connected therewith or incidental thereto.” The
Pension Fund Regulatory & Development Authority Act was passed on 19 th
September 2013 and notified on 1st February 2014, thus setting up PFRDA as the
regulator for pension sector in India. However, there remains a considerable
amount of confusion with other entities like the Employees Provident Fund,
pension funds run by life insurer, and mutual funds companies being outside the
purview of PFRDA.
The contributory pension system was notified by the Government of India on 22
December 2003, now named the National Pension System (NPS) with effect from
1 January 2004. The NPS was subsequently extended to all citizens of the country
with effect from 1 May 2009, including self-employed professionals and others in
the unorganized sector on a voluntary basis.

6 Withdrawal:
Premature withdrawal in NPS before age 60 required parking 80% of the sum in
an annuity. One can withdraw 20 percent of the corpus before 60 years but he/she
must buy annuity with 80 percent of the corpus. In 2016, the NPS allowed
withdrawal of up to 25% of contributions for specified reasons, if the schemes is at
least 3 years old with certain conditions. One can withdraw the complete amount if
the pension collected is less than INR 2,00,000.

7 Tax Benefits:
Investment in NPS is eligible for tax benefits as follows:
 Up to Rs. 150,000 under Section 80CCD(1). The benefit is additional capped at
10% of basic salary. The benefit under Section 80C, Section 80CCC and
Section 80CCD(1) is capped at Rs 150,000.
 Contribution up to Rs 50,000 under Section 80CCD(1B). This is over and
above tax benefit under Section 80CCD(1b).
 Employer co-contribution up to 10% of basic and DA without any upper cap in
terms of amount is tax free income in hands of employees under Section
80CCD(2).
8 Pension scheme tool

Public provident fund

Superann uation benefit National pension scheme

General provident fund Voluntary retirement scheme

Employee s pension fund

Provident fund

1. Public provident fund- 1968:

Public provident fund or PPF as it is more popularly known is a saving cum tax saving
account. Scheme introduced by Central Government in 1968. It also serves as a retirement
planning tool for many of those who do not have any structured pension plan covering them.
Rate of return: 8.70% p.a. (compounded annually) for FY 2014-15
Tax Benefits: interest is exempt from income tax. No TDS on interest.
Mode of account-holding: any individual can open a PPF account. More than one account/
joint account are not permitted. The PPF account can be opened in a Head post office, or in a
branch of the SBI or its subsidiaries and also at specified branches of some other nationalized
banks.
Investment limits: the contribution to the account can vary from year to year, from a
minimum of Rs 500 to a maximum of Rs 100000 in any given year. Investment in a PPF
account can be made either in a lump sum, or in installments. The credit to the PPF account is
made on the date of presentation of the cheque.
 Tenure: the tenure of the PPF account is 15 years, which can be further extended in blocks of
5 years each for any number of blocks.

Nomination: nomination facility is available in case of the PPF account.

Mode of payment: every subscription shall be made in cash or through a crossed cheque or
draft or postal orders, in favor of the accounts office, at the place at which that office is
situated.
2. National pension scheme:
The national pension scheme is a new contributory pension scheme introduced by the
Central government for the benefits of unorganized sector employees, self-employed
professionals and its new employees.
A government employee is covered by the NPS if:
 Joined central government service on or after 01 January 2004
 He/ she is an employee of a central civil ministry or departments
 He/ she is an employee of a non-civil ministry or department including railways, posts,
telecommunication or armed forces
 He/ she is an employee of an Autonomous body, grant-in-aid institution, union territory or any
other undertaking whose employees are eligible to a pension from the Consolidated Fund of
India.
A government employee is not covered by the NPS if:

Conclusion:
 These are the retirement products available for investment in our country. ideal time to start
saving for retirement would be 1-2 years after you get your first job. If you have not started
yet, it is time to start now. He/ she is already covered by the employees provident fund and
miscellaneous provisions act, 1952 and any other special acts governing these funds
 Joined central government service before 01 January 2004
 He/ she is an employee of the Indian armed forces
 He/she is employed in a department or in a post under which you are eligible to receive a
pension from the consolidated fund of India.
3. Voluntary retirement scheme ( golden hand shake):
Voluntary retirement scheme in short is referred to as VRS also. Organizations today
aspire to be lean and very often feel the need to right size themselves. Right sizing of the
manpower employed in an organization is an important management strategy in order to meet
the increased competition within the industry or on international front.VRS is the most
humane technique to provide overall reduction in the existing strength of the employees.
Objective of offering VRS to employees from employer perspective:
 To achieve optimum utilization in the company
 To optimize return on investment and reducing variable cost
 Management ensures that it is extended primarily to such employees whose services can be
dispensed with or without detriment to the company
 Due to joint venture agreements
 Due to takeover and merger
Tax treatment sec10 (10C):
Any amount received by an employee of a public sector company or of any other
company at the time of voluntary retirement is exempt to the extent of Rs. 5 lakh, provided the
scheme of such voluntary retirement is in accordance with the guidelines prescribed.

4. Provident fund:
It is the most common retirement benefit scheme. Under this scheme a fixed/
stipulated sum is deducted from the salary of the employee as his contribution towards the
fund. The accumulated deposits along with the interest are paid to the employee at the time of
his/ her retirement or resignation. In case of death of the employee the accumulated balance is
paid to their legal heirs.
Contribution:
 By employee: the employee contributes 12% of the basic wages, dearness allowance
including the cash value of any food concession and retaining allowance.
 By employer: the employer contributes 12% or 10% matching the contribution made by the
employee.
 Benefits:
 EPFO guarantees the employer contribution and credits interest at such rates as determined by
the central government.
 Members can withdraw from these accumulation to cater to financial exigencies in life- no
need to refund unless misused
 On resignation, the member can settle the account, i.e. the member gets his PF contribution,
employer contribution and interest.
 n case of death provident fund amount is paid to the family.

Withdrawal: member is entitled to withdraw full amount:

 On retirement from service
 On retirement on account of permanent and total incapacity to work due bodily or mental
infirmity
 Immediately before migration from India for permanent settlement abroad or for taking
employment abroad On termination of service under a voluntary scheme of retirement
 On termination of service in the case of mass or individual retrenchment
 After two months of resignation in case of no employment.

Taxation:
 Employees contribution: rebate u/s 80 C is available
 Employer’s contribution: exempt up to 12% of salary, excess of 12% is to be included in
gross salary.

5. Employees pension scheme 1995:

Employee’s pension scheme is a pension scheme for survivors, old aged and disabled
person. This scheme came into effect from 16 November 1995. The earlier family pension
scheme, 1971 offered only one type of benefit, namely, survivors benefit. On the other hand,
the new scheme caters for three types of contingencies:-
 Survivor pension: if death occurs during the service period.
 Old age pension: pension or superannuation
 Permanent disability: in the event of member suffering permanent disability while in services.
 Employee’s eligibility:
 Employees of covered establishment drawing less than Rs 15000 per month are covered by
the scheme.
 Employees of covered establishment drawing more than Rs 15000 per month can voluntarily
join the scheme.
 Employee whose salary increased to more than Rs 15000 during the course of employment
would compulsorily continue to be the member of the scheme.
Contributions:
 By employer covered by EPF scheme: from and out of the contributions payable by the
employer under the rules of the Provident fund, a part of contribution representing 8.33%of
the employee’s pay is accounted towards Employees Pension Fund.
 By employee: employee is not required to contribute separately under the Employees Pension
Scheme 1995.
Benefits:
 Salary includes basic salary and dearness allowances
 Pensionable salary is the average monthly pay drawn during the contributory period of service
in the span of 12 months preceding the date of exit from the membership of the Employees
pension fund
 If during the said span of 12 months, there are non- contributory period of service including
cases where the member has drawn salary for a part of the month, the total wages during the
12 month span shall be divided by the actual number of days for which the salary has been
drawn and the amount so derived shall be multiplied by 30 to work out the average monthly
pay
 The maximum pensionable salary shall be limited to six thousand and five hundred rupees per
month, unless the employee has opted for higher wages option
 Pensionable service period being more than 1 years and up to a maximum of 35 years
6. General provident fund:
GPF or general provident fund account is a provident fund account which is available
for government employees. A government employee can become a member of the fund by
contributing a certain percentage of their salary to the account. The accumulation in the fund
is paid to the government employee at the time of superannuation or retirement.
 GPF Eligibility: any government employee who is a resident of India is eligible for the
General Provident Fund account. The account is mandatory for a certain salary class
employed with the government. Employees working with private companies are not eligible
for the account.

How does GPF work?

General provident fund is a saving tool for individual employed with the government of India.
In the account, the account holder contributes a part of their salary into the account in regular
installments for a certain period of time. The money from the fund will be given to the
employee when they retire or at the time of superannuation. The account holder can nominate
a nominee at the time of opening the account. The nominee will receive the benefits from the
account if anything happen to the account holder.
GPF has a feature known as GPF advance which is an interest free loan from the
general provident fund savings. The amount borrowed should be paid back in regular monthly
installments. No interest will be paid on the GPF cash advance taken. One can take as many
GPF advances as needed in their career.

7. Superannuation benefits:
Superannuation is a voluntary benefit extended to employees of an organization. When an
employee retires, he no longer gets a salary but the need for a regular income continues.
Retirement benefits like provident fund and gratuity are paid in a lump sum which is often
spent so quickly or not invested wisely with the result that the employees find themselves
without a regular income during their retirement years. It’s a voluntary pension plan catering
to the retirement needs of the employee, and ensures he receives a pension after his
retirement. Employer has the liability to pay for superannuation benefit to the employee as
and when due, if any superannuation benefit plan is put in place. This can be arranged by the
employer in following ways:
 Payment as and when due by the employer
 Creating a superannuation trust fund
 Advantage to employer:
Superannuation plan has to be set up as an income tax recognized trust that can be
administered internally, but is typically managed and administered by an insurance company.
The employer appoints the trustees and drafts the trust deed and rules in consultation with the
insurance company that runs and administers the scheme and because the employer only acts
as a facilitators, a superannuation plan is designed to serve the interests of employees. The
employee gets a sizeable corpus if he has invested in a well-crafted superannuation plan.
Contribution by the employer to the trust is allowed a tax benefit to the employer.
Tax benefits available to an approved superannuation fund:

A. To employer:
 Annual contribution in respect of a member up to 15% of the salary in a financial year is
allowed as deduction for the purpose of computation of profits and gains of business or
profession.
 Income received from investments of the fund is exempt from income tax.
B. To employee:
 Contribution paid by the employer is not included in the value of taxable perquisite in the
hands of the employee
 Contribution paid by the employee is eligible for tax rebate
 Death benefit payable under the fund is exempt from income tax
 Commuted value up to the specified amount payable on retirement, at or after a specified age
is exempt from income tax.
9 Payment of gratuity act, 1972

Gratuity as defined by dictionary is a reward in lieu of loyalty. In past employers made

the payments to the employees for their loyalty shown. Later it was made an ACT, which still
goes by with the same principle. Gratuity is a statutory benefit paid to the employees who
have rendered continuous service for at least five years. The employer can structure a gratuity
benefit that is higher than statutory requirements. The gratuity benefit is payable on cessation
of employment (either by resignation, death, retirement or termination, etc).

Meaning of salary/ wages:

As per payment of gratuity act, 1972, salary/ wages includes all emoluments earned
by the employee while on duty or on leave, including DA, but does not include Bonus,
Commission, HRA, Overtime and any other allowances.
Eligibility of an employee:
1. Any person employed on wages/ salary
2. At the time of retirement or resignation or on superannuation, an employee should have
rendered continuous service of not less than 5 years
3. In case of death or disablement, the gratuity is payable, even if the employee has not
completed 5 years of service

Benefits:
1. The amount of gratuity is computed at the rate of 15 days wages based on rate of wages last
drawn by the employee concerned for every completed year of service or a part thereof
exceeding 6 months. A month is considered to be of 26 days.
2. The amount of gratuity is computed at the rate of 7 days wages per season in case of seasonal
employees.
3. he act puts a ceiling of Rs1000000 as the maximum liability of an employer for the payment
of gratuity. The total amount of gratuity payable shall not exceed the prescribed limit.
Annuity

An annuity is a contract where an insurance company promises to make payments to

an annuitant over a specified period of time or for life. One of the purposes for an annuity is to
make sure a person does not outlive his income. An annuity is a type of insurance to protect
against the risk of financial hardship during retirement.
An annuity is a contract between the investors and insurance company which the
investor pays lump sum payment or series of payment which is paid annually to investor by
insurance company after his retirement.
When a retiree opts for an annuity during retirement, they can approach life insurance
companies for buying one. Buying annuity from life insurance companies are a kind of
longevity risk or investment risk. The calculation of an annuity if not based alone on interest
factors but also takes into account the mortality factor in fixing up the annuity amount. The
pricing is based on the terms, types and age of the annuitant.

Types of Annuities:

Timing of Payments:
Payments of an annuity-immediate are made at the end of payment periods, so that interest
accrues between the issue of the annuity and the first payment. Payment of an annuity-due are
made at the beginning of payment periods, so a payment is made immediately on issueter.

Contingency of payments:
Annuities that provide payments that will pe paid over a period known in advance are
annuities certain or guaranteed annuities. Annuities paid only under certain circumstances are
contingent annuities. A common example is a life annuity, which is paid over the remaining
lifetime of the annuitant. Certain and life annuities are guaranteed to be paid for a number of
years and then become contingent on the annuitant being alive.

Variability of payments:
 Fixed annuities - These are annuities with fixed payments. If provided by an
insurance company, the company guarantees a fixed return on the initial investment.
Fixed annuities are not regulated by the Securities and Exchange Commission.
  Variable annuities – Registered products that are regulated by the SEC in the United
States of America. They allow direct investment into various funds that are specially
created for variable annuities. Typically, the insurance company guarantees a certain
death benefit or lifetime withdrawal benefits.

 Equity-indexed annuities – Annuities with payments linked to an index. Typically,

the minimum payment will be 0% and the maximum will be predetermined. The
performance of an index determines whether the minimum, the maximum or
something in between is credited to the customer.

Deferral of payments:
An annuity which begins payments only after a period is a deferred annuity. An annuity
which begins payments without a deferred period is an immediate annuity.
 1.5 Introduction to Life Insurance Corporation

 Introduction to LIC
A thriving insurance sector is very important to every modern economy. And perhaps
most importantly it generates long- term invisible funds for infrastructure building. The nature
of the insurance business is such that the cash inflow of insurance companies is constant while
the payout is deferred and contingency related. This characteristic feature of their business
makes insurance companies the biggest investors in long-gestation infrastructure development
projects in all developed and aspiring nations. This is the most compelling reason why private
sector (and foreign) companies, which will spread the insurance habit in the societal and
consumer interest are urgently required in this vital sector of the economy. Opening up of
insurance to private sector including foreign participation has resulted into various
opportunities and challenges in India.

Our Mission & Vision

10 Mission:
“Explore & Enhance the quality of life of people through financial security by providing
products and services of aspired attributes with competitive returns, and by rendering
resources for economic development”

11 Vision:
“A Trans-Nationally competitive financial conglomerate of significance to societies and pride
of India”

 Introduction
 With an annual growth rate of 15-20% and the largest number of life insurance
policies in force, the potential of the Indian insurance industry is huge. Total value of the
Indian insurance market (2004-05) is estimated at Rs.450
billion (US$10 billion). According to government sources, the insurance andbankingservices
’ contribution to the country's gross domestic product (GDP) is7% out of which the gross
premium collection forms a significant part.
The funds available with the state-owned Life Insurance Corporation
(LIC)for investments are 8% of GDP. Till date, only 20%of the total insurable
population of India is covered under various life insurance schemes, thepenetration rates of
health and other non-life insurances in India is also well
below the international level. These facts indicate the of immense growth potential of the
insurance sector.
The year 1999 saw a revolution in the Indian insurance sector, as major structural
changes took place with the ending of government monopoly and the passage of the
Insurance Regulatory and Development Authority (IRDA) Bill, lifting all entry restrictions
for private players and allowing foreign players to enter the market with some limits on direct
foreign ownership.
Though, the existing rule says that a foreign partner can hold 26% equity in an
insurance company, a proposal to increase this limit to 49% is pending
with the government. Since opening up of the insurance sector in 1999, foreign investments
of Rs. 8.7 billion have poured into the Indian market and 21private companies have been
granted licenses.
Innovative products, smart marketing, and aggressive distribution have enabled
fledgling private insurance companies to sign up Indian customers faster than anyone
expected. Indians, who had always seen life insurance as a taxsaving device, are now
suddenly turning to the private sector and snapping up the new innovative products on offer.
The life insurance industry in India grew by an impressive 36%, with premium
income from new business at Rs. 253.43 billion during the
fiscal year 2004- 2005, braving stiff competition from private insurers. RNCOS’s
report,“IndianInsurance Industry: New Avenues for Growth 2012”, finds that the market
share of the state behemoth, LIC, has clocked 21.87% growth in business atRs.197.86
billion by selling 2.4 billion new policies in 2004-05. But this was still not enough to arrest
the fall in its market share, as private players grew by 129%to mop up Rs. 55.57 billion in
2004-05 from Rs. 24.29 billion in 2003- 04.
 Though the total volume of LIC's business increased in the last fiscal year (2004-
2005) compared to the previous one, its market share came down from87.04 to 78.07%. The
14 private insurers increased their market share from about 13% to about 22% in a year's
time. The figures for the first two months of the fiscal year 2005-06 also speak of the growing
share of the private insurers. The share of LIC for this period has further come down to 75
percent, while the private players have grabbed over 24 percent.
There are presently 12 general insurance companies with four public-sector
companies and eight private insurers. According to estimates, private insurance companies
collectively have a 10% share of the non-life insurance market.
Though the focus of this market research report is on the potential growth on the
Indian Insurance Sector, it also talks about the market size, market segmentation,
and key developments in the market after 1999. The report gives an instant overview of the
Indian non-life insurance market, and covers fire, marine, and other non-life insurance. The
data is supplied in both graphical and tabular format for ease of interpretation and analysis.
This report also provides company profiles of the major private insurance companies.

Life Insurance
Definition“
The life insurance contract embodies an agreement in which broadly stated, the insurer
undertakes to pay a stipulated sum upon the death of the insurer to a designated beneficiary.”

Life Insurance in India

With such a large population and the untapped market area of thispopulation
Insurance happens to be a very big opportunity in India. Today it stands as a business
growing at the rate of 15-20 per cent annually. Together with banking services, it adds about
7 percent to the country’s GDP .In spite of all this growth the statistics of the penetration of
the insurance in the country is very poor. Nearly 80% of Indian populations are without
Life insurance cover and the Health insurance.
This is an indicator that growth potential for the insurance sector isimmense in India.
It was due to this immense growth that the regulations were introduced in the insurance
sector and in continuation “Malhotra Committee” was constituted by the government in 1993
to examine the various aspects of the industry. The key element of the reform process was
Participation of overseas insurance companies with 26% capital. Creating a more efficient
and competitive financial system suitable for the requirements of the economy was the main
idea behind this reform.
Since then the insurance industry has gone through many sea changes. The competition LIC
started facing from these companies were threatening
tothe existence of LIC. Since the liberalization of the industry the insuranceindustry has never
looked back and today stand as the one of the most competitiveand exploringindustry in
India. The entry of the private players and the increased use of the new distribution are in the
limelight today. The use of new distribution techniques and the IT tools has increased the
scope of the industry in the longer run.

 History of LIC
 In India, insurance has a deep-rooted history. It finds mention in the writings of Manu,
(Manusmrithi), Yagnavalkya (Dharmasastra) and Kautilya (Arthasastra). The writings talk in
terms of pooling of resources that could be re-distributed in times of calamities such as fire,
floods, epidemics and famine. This was probably a pre-cursor to modern day insurance.
Ancient Indian history has preserved the earliest traces of insurance in the form of marine
trade loans and carriers’ contracts. Insurance in India has evolved over time heavily drawing
from other countries, England in particular.
The process of insurance has been evolved to safeguard the interests of people from
uncertainty by providing certainty of payment at a given contingency. Life insurance in its
modern form came to India from England in 1818 with the formation of Oriental Life
Insurance Company (OLIC) in Calcutta mainly by Europeans to help widows of their kin.
Later, due to persuasion by one of its directors (Shri Babu Muttyal Seal), Indians were also
covered by the company. By 1868, 285 companies were doing business of insurance in India.
Earlier these companies were governed by Indian company act 1866. By 1870, 174 companies
ceased to exist, when British parliament enacted insurance Act 1870. These companies were
however, insuring European lives. Those Indians who were offered insurance cover were
treated as sub- standard lives and were accepted with an extra premium of 15% to 20%.
First Indian Company -Pioneering efforts of reformers and social workers like Raja Ram
Mohan Ray, Dwarakanath Tagore, Ramatam Lahiri, Rustomji Cowasji and other led to entry
of Indians in insurance business. First Indian insurance company under the name “Bombay
Life Insurance Society” started its operation in 1870, and started covering Indian lives at
standard rates. Later “Oriental Government Security Life Insurance Company”, was
established in 1874, with Sir Phirozshah Mehta as one of its founder directors and later
emerged as a leading Indian insurance company under the name “Bombay Life Assurance
Society” started its operations in 1870.

Pre-Independence Scenario -With the patriotic fervor of Non-Corporation Movement (1919)

and Civil Disobedience Movement (1929), number of Indian companies entered the insurance
arena. Eminent figures in political area like Mahatma Gandhi and Pandit Nehru openly
encouraged Indians to enter the fray. In 1914 there were only 44 companies; by 1940 this
number grew to 195. Business in force during this period grew from Rs.22.44 crores to
Rs.304.03 crores (1628381 polices). Life fund steadily grew from Rs.6.36 crores to Rs.62.41
crores. In 1938, the insurance business was heavily regulated by enactment of insurance Act
1938(based on draft bill presented by Sir N.N.Sarcar in Legislative Assembly in January
1937). From here onwards the growth of life insurance was quite steady except for a setback
in 1947- 48 due to aftermath of partition of Indian. In 1948, there were 209 insurances, with
712.76 crores business in force under 3,016, 000 policies. The life fund by then grew to
150.39 crores. Nationalization of Life Insurance (1956) - Despite the mushroom growth of
many insurance companies per capita insurance in Indian was merely Rs.8.00 in 1944(against
Rs.2, 000 in US and Rs.600 in UK), besides some companies were indulging in malpractices,
and a number of companies went into liquidation. Big industry houses were controlling the
insurance and banking business resulting in inters looking of funds between banks and
insurance companies. This shook the faith of insuring public in insurance companies as
custodians of their savings and security. The Government of India nationalized the life
insurance industry in January, 1956 by mergingabout 250 life insurance companies and
forming Life Insurance Corporation of India (LIC), which started functioning from
01.09.1956.
Some of the important milestones in the life insurance business in India are:
1818: Oriental Life Insurance Company, the first life insurance company onIndian soil started
functioning.
1870: Bombay Mutual Life Assurance Society, the first Indian life insurancecompany started
its business.
1912: The Indian Life Assurance Companies Act enacted as the first statuteto regulates the
life insurance business.
1928: The Indian Insurance Companies Act enacted to enable thegovernment to collect
statistical information about both life and non-lifeinsurance businesses.
1938: Earlier legislation consolidated and amended to by the Insurance Actwith the objective
of protecting the interests of the insuring public.
1956: 245 Indian and foreign insurers and provident societies are taken over by the central
government and nationalized. LIC formed by an Act ofParliament. LIC Act, 1956, with a
capital contribution of Rs. 5 crore from the Government of India.
Post Nationalization Trend - After completing the arduous task of integration of about 250
life insurance companies, the LIC of India gave an exemplary performance in achieving
various objectives of nationalization.

1.6 Organizational Structure of LIC:

The life Insurance Corporation of India has a five tier organizational structure as shown
in following chart:
CENTRAL OFFICE (1)
↓
ZONAL OFFICES (8)
↓
DIVISIONAL OFFICES (113)
↓
BRANCH OFFICES (2048)
↓
SATTELITE OFFICES (1169)
The board of the corporation is constituted by the central Government after every
two years and the numbers of the members of the Board does not exceed 16. Out of these
members one is appointed as Chairman and three are appointed as managing Directors of the
Board. The chairman acts as Chief Executives of LIC. The Chairman and Managing Directors
are full time employees of LIC and they constitute the highest decision making body known as
Board of Directors of the Corporation. The corporation constitutes various committees under
the life insurance act viz., Investment Committee, Executive Committee and Advisory
Committee, Development Advisory Committee and Budget Advisory Committee).The
Chairman of the Corporation is the chairman of all these committees.
The Central office of LIC is located in Mumbai which is known as financial capital
of India. The Central Office confines itself mainly to giving broad policy directions and
decisions. It has direct executives responsibility over a limited field. Investment policy and
investing of funds in accordance with that policy is the soe responsibility of the central office.
The formulation of underwriting standards, setting up of premium rates and underwriting of
large proposal which are beyond the limits of the operating divisional offices particularly
policy for large sum assured and policies on lives of sub-standard nature are also attended by
the central office. Submission of statutory returns to the Government, standardization
procedure,
forms, drawing up of prospectus, premium rates, policy conditions and making arrangements
with regards to reinsurance are other responsibilities looked after by the central office.
Inspection and internal auditing of various offices is also done by central office. In general,
policy decisions are made by the Chairman of the Corporation with the help of the Executives
Committee and various other committees. For the execution of the policies and decisions, LIC
has divided the whole country in different zones. Each Zonal office is responsible for LIC’s
business in its own geographical limits. Initially, five zonal offices were opened at Mumbai
(western), Delhi (Northern), Kanpur (Central), Calcutta (Eastern) and Madras (Southern) as
per the requirements of the Life Insurance Act. However, later three more Zonal Offices,
namely South- Central at Hyderabad, North- Central at Bhopal and East-Central at Patna were
opened thus increasing the total number of Zonal Offices to eight. The Zonal Offices are
working under the supervision of Zonal managers, who are charged with the responsibility of
execution of Central office’s plans and policies, supervising and directing the affairs and
business of Zonal offices and providing feedback to the central Office.
The zones are further divided into Divisional offices. Each Zonal Office has some
Divisional Offices under it. Each Divisional Office is headed by a Divisional manager who is
assisted by Manager in-charge of individual department. The role of Divisional office has
been restricted to planning and controlling the various activities in the divisional area.
Operational unit of the Corporation is the Branch Office which is a centre of profit and
growth. It is the branch Office which is responsible in its area of operation for sales and
services. Branches are the profit centers of the corporation being guided and controlled by the
Divisional offices. At present there was 2048 Branch Offices working in whole of India.
With a vision of providing easy access to its policyholders, LIC has started
establishing Satellite offices during 2005-06. These satellite offices which are attached to
respective parent branches are basically an extension of large parent branches for services to
policyholders. Processing of new proposals and collection of renewal premium are main
functions of these offices. Each satellite office is manned by 2-3 people, all employees of the
company, depending on the need of that particular area. These offices are launched mostly in
small towns adjoining the rural areas. The Economic Times Brand Equity Survey 2010 rated
LIC as the No. 4 Service Brand of the Country. Though in the year 2010 is ranked at 4, the
organization is consistently among the top rated service company of the India. From the year
2006, LIC is continuously winning the Readers' Digest Trusted brand award .According to
The Brand Trust Report 2011; LIC is the 8th most trusted brand of India.
 1.7 RETIREMENT PRODUCTS RELATED TO LIC:

 New Jeevan Nidhi (818):

Product summary: LIC New Jeevan Nidhi (818) plan is a conventional with profits
pension plan which provides for death cover during the deferment period and offers annuity
on survival to the date of vesting.

Premium payment mode: yearly, halfly, quarterly and monthly

Term: 7 to 35 years
Minimum entry age:
20 years completed
Maximum entry age:
58 year (nearest birthday)
Minimum vesting age:
55 year
Maximum vesting age:
65 year
Minimum sum assured:
100000
Maximum sum assured:
No limit (Depending upon income)
Maximum accidental death and disability benefit rider up to age 70

Policy benefits:
On death:
Death during first five policy year: sum assured + guaranteed addition
Death after first five policy years: sum assured+ guaranteed addition + vested bonus + FAB if
any.

On vesting:
On vesting basic sum assured + guaranteed addition + vested bonus + FAB if any.
 Option on vesting:
1. Get 1/3rd amount as commutation and buy Jeevan Akshay policy of Balance amount increased
by 3%.
2. Buy Jeevan Akshay of full vesting amount increased by 3%.
3. Buy Jeevan Nidhi single premium.

Surrendered value:
1. Single premium: the policy can be surrendered at any time during the deferment period
2. Regular premium:
Term less than 10: after at least 2 full years’ premiums have been paid.
Term 10 or more: after at least 3 full years premium have been paid
Loan: No loan facility will be available under this plan.
Income tax benefit:
 On premium: u/s 80C
 Commutation tax free: u/s 10(10A)iii
 Death claim tax free: u/s 10(10D)
 Pension: taxable
 Jeevan Akshay VI (189):

Product Summary: LIC Jeevan Akshay (189) is an immediate annuity plan that can be
bought by paying a lump sum as single premium. Pension will start immediately after buying
the policy. Various options are available for the type and mode of payment of annuities. But
once chosen, it cannot be changed.

Premium payment mode:

Single premium

Annuity mode:
Annuity may be paid either at monthly, quarterly, halfly or yearly intervals. You may opt any
mode of payment of annuity.
Minimum entry age:
30 year completed
Maximum entry age:
 100 year last birthday for option [F] annuity for life with the return of purchase price on death
 85 year last birthday for all annuity option other than option[F]
Minimum sum assured:
 Rs 100000 for all distribution channel except online
 Rs 150000 for online sale
Maximum sum assured: No Limit
Annuity option:
 Annuity for life
 Annuity guaranteed for 5, 10, 15 or 20 years and for life thereafter
 Annuity for life with return of purchase price on death.
 Annuity for life increasing at a simple rate of 3%
 Annuity for life with a provision for 50% of the annuity to the spouse of the annuitant for the
life on death of the annuitant
 Annuity for life with a provision for 100% of the annuity to the spouse of the annuitant for the
life on death of the annuitant
 Annuity for life with a provision of 100% of the annuity payable to spouse during his/ her life
time on death of annuitant with return of purchase price on the death of last survivor
 Policy benefits:
On death:
a. Under option (i)- payment of annuity ceases
b. Under option (ii)-
1. On death during the guarantee period- annuity is paid to the nominee till the end of the
guaranteed period after which the same ceases
2. On death after the guarantee period- payment of annuity ceases
c. Under option (iii)- payment of annuity ceases and the purchase price is returned to the nominee
d. Under option (iv)- payment of annuity ceases
e. Under option (v) - payment of annuity ceases and 50% of the annuity is paid to the surviving
named spouse during his/her lifetime. If the spouse predeceases the annuitant, nothing is
payable after the death of the annuitant.
f. Under option (VI) - payment of annuity ceases and 100% of the annuity is paid to the
surviving named spouse during his/her lifetime. If the spouse predeceases the annuitant,
nothing is payable after the death of annuitant.
g. Under option (vii) – payment of ceases. 100% of the annuity is paid to the surviving named
spouse during his/her lifetime and purchase price is return to the nominee after the death of
spouse. If the spouse predeceases the annuitant, the annuity ceases and purchase price is paid
to the nominee. The amount shall be assured throughout the period for which it is payable.

Surrender value:
It shall be allowed after completion of at least one policy year from date of
commencement of policy only for annuity option [F] in some circumstances.
Loan: no loan will be available under the policy.
Income tax benefit:
 Premium paid under this plan is eligible for tax rebate under section 80C
 Pension that is received is taxable
Proposal form 440 (IA) shall be used under this plan.
 Jeevan Nidhi Single Premium (818)

Product summary:
LIC New Jeevan Nidhi (818) plan is a conventional with profits pension plan which
provides for death cover during the deferment period and offers annuity on survival to the date
of vesting.

Premium payment mode:

Single premium
Term:
5 to 35 years
Minimum entry age:
20 year completed
Maximum entry age:
60 year
Minimum vesting age:
55 year
Maximum vesting age:
65 year
Minimum sum assured:
150000
Maximum sum assured:
No Limit (depending upon income)

Policy benefits:
On death:
Death during first five policy year: sum assured + guaranteed addition
Death after first five policy year: sum assured + guaranteed addition + vested bonus + FAB if
any
On vesting:
On vesting basic sum assured + guaranteed addition + vested bonus + FAB if any.
 Option on vesting:
1) Get 1/3rd amount as commutation and buy Jeevan Akshay policy of balance amount increased
by 3%
2) Buy Jeevan Akshay of full vesting amount increased by 3%
3) Buy Jeevan Nidhi single premium.

Surrender value:
1) Single premium: the policy can be surrendered at any time during the deferment period.
2) Regular premium:
Term less than 10: after at least 2 full years premiums have been paid.
Term 10 or more: after at least 3 full years premium have been paid.
Loan: No loan facility will be available under this plan.

Income tax benefits:

 On premiums: u/s 80C
 Commutation tax free: u/s 10 (10A) iii
 Death claims tax free: u/s 10 (10D)
 Pension: taxable.
 Pradhan Mantri Vaya Vandana Yojana (842)

Product summary:
‘Pradhan Mantri Vaya Vandana Yojana’ (842) is a government subsidized scheme
which shall provide an assured return of 8% p.a. payable monthly on the pensioner surviving
during the policy term of 10 years for citizens aged 60 years and above.

Premium payment mode:

Single premium

Mode of pension payment:

The modes of pension payment are monthly, quarterly, halfly or yearly. The pension payment
shall be through NEFT or aadhaar enabled payment system only.

Pension rate:
 Yearly: 8.30
 Halfly: 8.13
 Quarterly: 8.05
 Monthly: 8
Minimum entry age: 60 year completed
Maximum entry age: No Limit

Minimum sum assured:

 Yearly: 144578
 Halfly: 147601
 Quarterly: 149068
 Monthly: 150000

Maximum sum assured:

 Yearly: 722892
 Halfly: 738007
 Quarterly: 745342
 Monthly: 750000
 Minimum pension limit:
 Rs 1000 per month
 Rs 3000 per quarter
 Rs 6000 per halfly
 Rs 12000 per year

Maximum pension limit:

 Rs 5000 per month
 Rs 15000 per quarter
 Rs 30000 per halfly
 Rs 60000 per years

Policy benefits:
On death: On death, the full purchase price will be refunded to nominee.

Surrendered value:
Surrender would be allowed in special circumstances like critical/ terminal illness of
self or spouse. The surrender value payable in such cases shall be 98% of purchase price.

Loan: loan (up to 75% of subscribed amount) can be availed after 3 years from date of
commencement.
 CHAPTER: 2

2.1 RESEARCH METHODOLOGY:

In order to conduct the research an appropriate methodology became necessary. The

information provided in this project has been collected from various sources.

The data- the material for the project has been collected keeping in view the objectives
of a project and accordingly data has been found out from the following two sources:

2.2 Sampling method:

The method defines whether we have to go for probability or non-probability method for
selecting sample from population
The study has used method of convenience sampling method, it is also called as accidental
sampling method. In this method we take people who are more conveniently available.
Convenient sample are often adopted non-probability sampling.
Non-probability sampling provides a rage of alternative techniques to selected samples
based on subjective judgements.

Number of Sample:
The sample of responded to be surveyed is given by this sample size is 100 respondant.

Methods of Data Collection:

Primary Data:

In this research with sample size of 100 consumer’s data will be available in the form
of questionnaire in terms of different questions influencing the study of retirement planning.
All the individual age group between 18-55 years is taken into consideration.

Secondary Data:

The secondary data has been collected referring the various books, websites, magazines
and other sources related to retirement planning. The data collected is pertaining to the
theoretical aspects of retirement planning. Collection of information for the project is done
from different kinds of books and through internet.
 2.3 OBJECTIVES OF STUDY:

1) To determine the financial strategies of saving, investment and ultimately

distribution of money meant sustain one’s self during retirement.

2) To study the importance of having a retirement planning in initial stages in life.

3) To analyse the pre-post retirement strategies.

4) To examine the retirement planning behaviour of working individuals from

different age groups.

5) To study the trends in retirement planning.

6) To analyse the procedure of retirement planning.

7) To examine whether other demographic variables are relatively important

for retirement.
 2.4 NEED AND SCOPE OF THE STUDY:

1) The study involves the retirement planning provided by LIC and it’s benefits
to customers.

2) The study involves the planning to ensure financial independence at retirement.

3) This is done by interviewing the customers. Therefor the scope of study is limited
to some extent information gathered from the people.

4) The study will help to customize the services and product, according to the
customers need.

5) The scope also include the findings the way to addresses the problem of
the customers of the improving the satisfaction level.

2.5 HYPOTHESES OF THE STUDY:

2 H1 Age group is significant related to retirement planning behaviour.

3 H2 Income level is significant related to retirement planning behaviour.

4 H3 Education level is significant related to retirement planning behaviour.

5 H4 Goal clarity is significant related to retirement planning behaviour.

6 H5 Attitude toward retirement is significant related to retirement planning behaviour.

7 H6 Potential conflict in retirement is significant related to retirement planning behaviour.

CHAPTER: 3
 REVIEW OF LITERATURE

According to Wong and Earl (2009), retires neglected retirement planning because
they have certain level of difficulty in adjusting to retirement. In the findings, the results
suggest that only individuals: 1) demographics 2) health. Organization: 1) condition of
workforce exit influences predicts a better retirement planning. Psychosocial: 1) work
centrality influences have no significant impact on retirement planning behavior in an
integrated model.
Lusardi and Mitchell (2007) showed that planners accumulate large wealth than
non-planners through savings, investment, and probability of selling house to finance
retirement and others.
According to Elder & Rudolph (1999) planning activities imply a higher
likelihood of satisfaction even for those whose retirement decisions were not made voluntarily
(either through health problems or an employer mandate). Marital status, health status, level of
education, whether the individual was force to retire and pre-retirement occupation as well as
the retirement planning have an impact on the level of retirement satisfaction.
Lai, Lai and Lau (2009) found that there is significant difference between
teaching position, education and age across the annual income levels from academics’
perspective. This survey found that academics exhibited positive attitude toward money and
income considered to be the prime motivator.
Dvorak and Hanley (2010) found that participants have a fairly good
understanding of the basic mechanics of the plan but they have insufficient knowledge to
differentiate among numerous investment options. Women have low knowledge, income and
education compared with men. This study pointed that the older participants are more likely to
make personal contributions. However, education is perhaps the most significant determinant
of financial literacy.
According to Kim, Kwon and Anderson (2004), the individuals’ retirement
confidence tend to be higher than others as they calculated their retirement fund needs and had
more savings. The level of confidence will increase as the higher household income provided
that they are with better health. The working individuals who received workplace financial
education and advice earlier help them to have more confidence toward retirement planning
(Power & Hira, 2004)
 The future time perspective, financial knowledge, and financial risk tolerance are
important variables when it comes to understanding individuals’ retirement saving practices
(Jacobs-Lawson & Hershey, 2005).

Stawski, Hershey and Jacobs-Lawson (2007) indicated that retirement goal clarity is a
significant predictor of planning practices, and planning, in turn to predict savings tendencies.
This study found that income and age were important elements of the model with income
accounting for roughly half of the explained variance in savings contributions.

Review of Relevant Theory:

Symbolic interaction theory is a social science theory and was applied in this study. This
theory claims that facts are based on and directed by symbols (Aksan, Kisac, Aydin &
Demirbuken, 2009). According to this theory, people live both in the natural and the symbolic
environment and focuses attention on the way that people interact through symbols such as
words, gestures, rules and roles. There are three core principles in symbolic interaction
perspective of Blumer, the founder of symbolic interaction theory, which are meaning,
language and thinking. There are five concepts in symbolic interaction theory namely; role,
self, interaction, culture and norm (Meltzer, Petras & Reynolds, 1975). The working
individuals are the target samples in this study. The symbolic interaction theory, helped in
finding the perspective of working individuals toward the proximity of retirement planning.
As the working individuals are divided into three groups according to their age, they might
have different thinking and perspective toward the retirement planning among them. As a
result, the attitude of individuals will influence their behavior on making decision in
retirement planning. Moreover, the way of their thinking might influence the group among
them due to the social interaction process. The working individuals who are more
knowledgeable about the retirement planning tend to influence other individuals from his or
her point of view. When the interaction among the individuals is successful, the retirement
planning might become a culture of society.

Chapter-4
DATA ANALYSIS, INTERPRETATION AND PRESENTATION
 ( PRIMARY DATA)

INFORMATION COLLECTED FROM CUSTOMERS

GRAPH NO. 1
GENDER DIFFERENTIATION OF RESPONDENT

GENDER OF NUMBER OF % OF RESPONDENT

RESPONDENT RESPONDENT
Male 61 61%

Female 39 39%

Total 100 100%

BELOW GRAPH SHOW THAT GENDER DEFFERETIATION OF RESPONDENT

GENDER RATIO

39%

61%

GENDERMALEFEMALE

DATA INTERPRETATION:
According to above diagram, we can say that a Gender ratio of male and female. Male
respondent is 61% and female respondent is 39%.
TABLE NO.2
AGE DIFFERTIATION OF RESPONDENT
 18-25 26-35 36-45 46-55 56-65 66+
30 25 19 22 3 NIL

GRAPH NO.2
BELOW GRAPH SHOWS THAT AGE DIFFERTIATION OF RESPONDENT

AGE
30
30
25
25 22
19
20

15

10

5 3

0
AGE 18-25 26-35 36-45 46-55 56-65

DATA INTERPRETATION:
According to above diagram, we can say that Age ratio of respondent is 18-25=30
respondent, 26-35=25 respondent, 36-45=19 respondent, 46-55=22 respondent, 56-65=3
respondent.

TABLE NO. 3
OCCUPATION OF RESPONDENT
 STUDENT 22
SERVICE 41
PROFESSIONAL 21
HOUSEWIFE 14
RETIRED 2
TOTAL 100

GRAPH NO. 3
BELOW GRAPH SHOWS THAT OCCUPATION DIFFERENTIATION OF
RESPONDENT

OCCUPATION RATIO
45

40

35

30

25

20

15

10

DATA INTERPRETATION:
According to above diagram, we can say that Occupation Ratio of the respondent. Students-
22%, Service-41%, Professional-21%, Housewife-14%, Retired-2% respondent.

TABLE NO. 4
RESPONDENT WHO HAVE STARTED PLANNING FOR RETIREMENT
 YES NO NOT YET TOTAL
23 24 53 100

GRAPH NO. 4
BELOW GRAPH SHOWS THAT NUMBER OF RESPONDENT WHO HAVE
STARTED PLANNING FOR RETIREMENT

23%

53%

24%

YESNONOT YET

DATA INTERPRETATION:
According to above diagram we can say that 53% of the respondent are not yet decide
about retirement planning, 23% of the respondent has planned for retirement and 24% of the
respondent has not planned for retirement.

TABLE NO. 5
RESPONDENT WHO HAVE CONTACTED FOR RETIREMENT FINANCIAL
 ADVICE

NO ONE 64
FINANCIAL PLANNER 6
MY BANK 12
INSURANCE AGENT 6
RELATIVES OR FRIENDS 12
TOTAL 100

GRAPH NO. 5

RELATIVES OR FRIENDS

INSURANCE AGENT

MY BANK

FINANCIAL PLANNER

NO ONE

0 10 20 30 40 50 60 70

Series1Series2

DATA INTERPRETATION:
From the above chart 64% of respondent have not contacted to any financial adviser while
6% of respondent have adviced financial planner, 12% of respondent have contacted their
respective banks, 6% of the respondent have contacted their insurance agent and 12% of the
respondent have have taken relatives or friends advice.

TABLE NO. 6
IN HOW MANY YEARS RESPONDENT WANT TO RETIRE
 1-10 10-20 20-30 DON’T KNOW
12 36 17 35

GRAPH NO.6

40
36
35
35

30

25

20 Series1
17 Series2

15
12

10

1-10YEARS 10-20YEARS 20-30 YEARS DON'T KNOW

DATA INTERPRETATION:
Above diagram shows that 36% of the respondent of different age group want to get retire
in next 20-30 years of age, 12% of the respondent want to get retire in next 1-10 years, 17%
of the respondent want to get retire in next 20-30 years and the rest 35% of the respondent
don’t know.

TABLE NO.7
WHAT % OF THE INCOME DO RESPONDENT SAVE FOR RETIREMENT
 PLANNING

NIL 66
0-10% 12
10-20% 12
20-30% 4
MORE THAN 30% 6

GRAPH NO.7

70 66

60

50

40

30

20
12 12

10 6
4

0
NIL 0-10% 10-20% 20-30% MORE THAN 30%

Series1 Series2

DATA INTERPRETATION:
According to the above chart 12 respondents save their income to 0-10% and 10-20%, 4
respondent save their income to 20-30%, 6 respondents save upto more than 30% while 66
respondent do not save their income.

TABLE NO.8
 FINANCIAL STEPS FOE RETIREMENT PLANNING
NONE 54
SAVING ACCOUNT 37
PURCHASE CERTIFICATE OF DEPOSITS 1
INVESTMENT IN STOCKS 2
INVESTMENT IN BONDS NIL
INVESTMENT IN MUTUAL FUNDS 6

GRAPH NO.8

INVESTMENT IN MUTUAL FUNDS 6

INVESTMENT IN STOCKS 2

PURCHASE OF CERTIFICATE OF DEPOSIT 1

SAVING ACCOUNT 37

NONE 54

0 10 20 30 40 50 60

Series1Series2Series3Series4

DATA INTERPRETATION:
According to the above chart 54% respondent are not ready to take financial steps for
retirement, 37% of the respondent would like to take saving account as the financial step and
6% of the respondent would like to invest in mutual funds.

TABLE NO.9
 HOW WOULD YOU RATE IF YOU HAD TAKEN FOR RETIREMENT

EXCELLENT 12

GOOD 72

FAIR 13

POOR 3

GRAPH NO.9

POOR 3

FAIR 13

GOOD 72

EXCELLENT 12

0 10 20 30 40 50 60 70 80

Series1Series2

DATA INTERPRETATION:
The above diagram shows 12% of respondent are excellent, 72% of the respondents are
good, 13% of the respondents are fair and 3% of the respondents have rate poor.

CHAPTER-5
 5.1 FINDINGS

5.2 SUGGESTIONS

5.3 CONCLUTIONS

5.4 BILOGRAPHY

5.5 WIBLIOGRAPHY

5.6 ANNEXURE

5.6.1 LIST OF TABLE

5.6.2 LIST OF GRAPHS

5.1 FINDINGS

The results show different age groups of the working individuals have different
perspective toward the retirement planning behaviour. The younger generation of working
individuals (26- 35 years) perceived a better perception toward the retirement planning and
they are not worried about the retirement. Thus, early planning for retirement may bring
advantages and benefits to them in order to prevent them from not affording to retire since
they have sufficient time to plan on it. This also enables them to plan in order to pursue their
goal or dreams during the retirement life.
The findings show that age, education level, income level, goal clarity, attitude toward
retirement and potential conflict in retirement are the factors influencing the retirement
planning behaviour. In many similar studies, age has been found to be a significant predictor
of saving tendencies (Bassett, Fleming & Rodriguez, 1998; Grable & Lytton, 1997). In this
study, education level and income level are the significant variables for the retirement
planning behaviour other than age. Meanwhile the psychological factors also play an
important role in affecting the retirement planning behaviour. Findings support that goal
clarity, attitude toward retirement and potential conflict in retirement are the important factors
that influence working
individuals’ behaviour and attitude toward retirement. Further this study also consists of the
percent of household annual income contributed to a retirement saving plan or account and
investment instrument made by the working individuals. There are couples of working
individuals do not contribute to a retirement saving plan or account.
The finding of this study can be an alert to all the working individuals to prepare their
retirement planning in their early life. The study results show those 26 to 35 years is the most
suitable age to start to plan the retirement because at this age, the employees show a positive
attitude toward retirement. Working individuals might realize that early planning retirement
enables working individuals to have strong financial planning to secure them in their afterlife
of retirement.

5.2 SUGGESTIONS

Financial goals vary, based on Investors age, lifestyle, financial independence, family
commitment and level of Income and expenses among many other factors. Therefore, it is
necessary for Mutual Funds Companies to assess the consumer’s need. They should begin by
defining their investment objectives and needs which could be regular income, buying a home
or finance a wedding or education of children or a combination of all these needs, the
quantum of risk, they are willing to take and their cash flow requirements.
Mutual Investors should choose the right Mutual Fund Scheme which suits their
requirements. The offer document of the Mutual Fund Scheme should be thoroughly read and
scrutinized. Some factors to evaluate before choosing a particular Mutual Fund are the track
record of the performance of the fund over the last few years in relation to the appropriate
yard stick and similar funds in the same category. Other factors could be the portfolio
allocation, the dividend yield and the degree of transparency as reflected in the frequency and
quality of their communications.
Investing in one Mutual Fund scheme may not meet all the investment needs of an
investor. They should consider investing in a combination of schemes to achieve their specific
goals.

5.3 CONCLUSION
 Retirement is a life transition process and not a single event. It is not an end so
much as it is a phase change. As is the case with any other major life transitions, retirement
requires that to adapt and grow. It may involve one or more grief periods, but these inevitable
moments of grief need not last for the rest of your life. The efforts spent planning for
retirement before it occurs will help to insure that the retirement will be a smooth and painless
process when it finally arrives.
Thought the act of retirement occurs in a day or week, the process of retirement necessarily
unfolds over years. Retirement cannot be adjusted to overnight, but will instead require time
and effort spent on your part in order that you successfully navigate crisis and grief processes
and come to identify a particular retirement path that will be best for you. The retirement path
may change several times during your retirement as your interest, level of activity, and health
fluctuate. It helps to keep yourself open to life possibilities to commit yourself to
communicating openly with your spouse or partner, family member and friends, and to
remember to ask for help when you get stuck. Trust in yourself that you will adjust to
retirement, just as you have adjusted to prior transitions and changes in your lifetime.
Retirement is just one more transition. Relax and do what you can to enjoy the ongoing
beginning of the rest of your life.

5.4 BILOGRAPHY

5.5 WEBILIOGRAPHY
 https://www.licindia.in/
 www.retirementplanning.com
 www.wikipedia.com
5.6 ANNEXURE
 Questionnaries

“ A Study on Retirement plan, Insurance Scheme Offered By LIC”

NAME:
AGE:
GENDER:
OCCUPATION:
Q.1) Have you started planning for retirement?

o Yes
o No
o Not yet
Q.2) What is your age range?

o 18- 25
o 26- 35
o 36- 45
o 46- 55
o 56- 65
o 66+
Q.3) Who have you contacted for retirement financial advice

o No one
o Financial Planner
o My Bank
o Insurance Agent
o Relatives or friends with financial experience
Q.4) In how many years do you plan to retire?

o Next 1 –10 years

o Next 10 –20 years
o Next 20-30 years
o Don’t’ Know

Q.5) How much do you save for your retirement planning?

o Nil
o 0-10%
 o 10-20%
o 20-30%
o More than 30%
Q.6) What financial steps have you taken for retirement?

o None
o Saving account
o Purchase certificate of deposits
o Invested in stocks
o Invested in bonds
o Invested in mutual funds
Q.7) How would you rate if you had taken for retirement?

o Excellent
o Good
o Fair
o Poor
Q8) How many alternatives you want to have for retirement planning ? Name them.

1)
2)
3)
4)
Q9) what are your back-up plans for your retirement if your actual plan fails?

1)
2)
3)
4
Q10) How will you be doing evaluation of retirement planning?

1)
2)
3)
4)
5.6.1 LIST OF TABLES

SR. NO NAME OF THE TABLE PAGE

NO
1 GENDER DIFFERTIATION OF RESPONDENT

2 AGE DIFFERTIATION OF RESPONDENT

3 OCCUPATION OF RESPONDENT

4 RESPONDENT WHO HAVE STARTED PLANNING

FOR RETIREMENT

5 RESPONDENT WHO HAVE CONTACTED FOR

RETIREMENT FINANCIAL ADVICE

6 IN HOW MANY YEARS RESPONDENT WANT TO RETIRE

7 WHAT % OF THE INCOME DO RESPONDENT SAVE FOR

RETIREMENT PLANNING

8 FINANCIAL STEPS FOR RETIREMENT PLANNING

9 HOW WOULD YOU RATE IF YOU HAVE TAKEN FOR

RETIREMENT
5.6.2 LIST OF GRAPHS

SR. NO NAME OF THE GRAPHS PAGE

NO
1 GENDER DIFFERTIATION OF RESPONDENT

2 AGE DIFFERTIATION OF RESPONDENT

3 OCCUPATION OF RESPONDENT

4 RESPONDENT WHO HAVE STARTED PLANNING

FOR RETIREMENT

5 RESPONDENT WHO HAVE CONTACTED FOR

RETIREMENT FINANCIAL ADVICE

6 IN HOW MANY YEARS RESPONDENT WANT TO RETIRE

7 WHAT % OF THE INCOME DO RESPONDENT SAVE FOR

RETIREMENT PLANNING

8 FINANCIAL STEPS FOR RETIREMENT PLANNING

9 HOW WOULD YOU RATE IF YOU HAVE TAKEN FOR

RETIREMENT