LIC Smart Pension Plan (879) Calculator

LIC Smart Pension Plan (879) Calculator

What this calculator does

LIC's Smart Pension (Plan 879) is a single premium annuity plan that lets you choose between two ways to start your pension: an Immediate Annuity, where payouts begin right after you pay the purchase price, or a Deferred Annuity, where you choose a deferment period during which your purchase price earns guaranteed additions before payouts begin. The plan also offers a higher annuity rate for larger purchase prices - a "high purchase price rebate" that most single-premium LIC annuity plans build in, since fixed running costs become a smaller share of a bigger investment.

This calculator gives you an indicative estimate of:

• the annual annuity and per-installment annuity your purchase price would buy, for either Immediate or Deferred Annuity
• the guaranteed additions accrued and vesting amount available for annuity (Deferred Annuity only)
• the high purchase price rebate applied to your annuity rate based on your purchase price slab
• the effective annuity rate (annual annuity as a % of your original purchase price)
• a comparison across purchase price slabs, so you can see how a larger purchase price improves your rate

based on your annuity type, current age, purchase price, deferment period (if deferred), chosen annuity option, and (for the joint life option) your spouse's/joint annuitant's age.

Formula Used

The base annual rate is interpolated from age-anchored reference points, applied at the age the annuity actually starts (your current age for Immediate Annuity, or your current age plus the deferment period - the annuity start age - for Deferred Annuity):

$$BaseRate(age) = \text{interpolate}\big((40, 5.6\%), (50, 6.1\%), (60, 6.8\%), (70, 7.8\%), (80, 9.2\%), (85, 10.2\%)\big)$$

For Deferred Annuity, guaranteed additions accrue as simple interest on the purchase price during the deferment period, at a rate that rises with the deferment period chosen:

$$GARate(years) = \text{interpolate}\big((1, 3.0\%), (3, 3.75\%), (5, 4.25\%), (7, 4.75\%), (10, 5.25\%)\big)$$ $$VestingAmount = PurchasePrice \times \big(1 + GARate(DefermentYears) \times DefermentYears\big)$$

For Immediate Annuity, the vesting amount is simply the purchase price (no deferment, no guaranteed additions).

A high purchase price rebate is added to the base rate depending on your purchase price slab (larger purchase prices earn a higher rate, in absolute percentage points):

$$Rebate(price) = \begin{cases} 0.00\% & price < 5{,}00{,}000 \\ 0.15\% & 5{,}00{,}000 \le price < 10{,}00{,}000 \\ 0.30\% & 10{,}00{,}000 \le price < 25{,}00{,}000 \\ 0.45\% & 25{,}00{,}000 \le price < 50{,}00{,}000 \\ 0.60\% & price \ge 50{,}00{,}000 \end{cases}$$

For the joint life option, the annuity start age uses the younger of the two annuitants' current ages, since payments continue until the second death:

$$EffectiveAge = \min(YourAge, JointAnnuitantAge)$$

The final annuity combines the base rate, the rebate, an annuity option factor, and a payment-mode factor:

$$AnnualAnnuity = VestingAmount \times \big(BaseRate(StartAge) + Rebate(PurchasePrice)\big) \times OptionFactor \times ModeFactor$$ $$InstallmentAmount = \frac{AnnualAnnuity}{InstallmentsPerYear}$$

Option factors used (relative to the pure life annuity, which pays the most since nothing is returned to a nominee or survivor):

Annuity Option	Factor
Life Annuity (No Return of Purchase Price)	1.00
Life Annuity with Return of Purchase Price	0.80
Joint Life Annuity with Return of Purchase Price	0.72

Payment-mode factors: yearly 1.00, half-yearly 0.995, quarterly 0.99, monthly 0.98.

Note: these rates are illustrative approximations for planning purposes, not LIC's official rate card, which varies by IRDAI-approved tables and can change over time. Always confirm exact figures with LIC or an authorized agent before purchasing a policy.

How to Use

1. Choose your Annuity Start Type - Immediate Annuity (payouts begin right away) or Deferred Annuity (payouts begin after a deferment period you choose).
2. Enter your current age (18 to 85 years; Immediate Annuity requires 40 to 85, Deferred Annuity requires 18 to 75).
3. Enter the purchase price (the lump sum you plan to invest) - minimum ₹1,00,000.
4. If you chose Deferred Annuity, choose a deferment period (1 to 10 years).
5. Choose an annuity option: Life Annuity, Life Annuity with Return of Purchase Price, or Joint Life Annuity with Return of Purchase Price.
6. If you choose the joint life option, enter the age of your spouse/joint annuitant.
7. Choose how often you want the annuity paid - yearly, half-yearly, quarterly, or monthly.
8. Click Calculate Pension to see your annuity start age, high purchase price rebate, vesting amount, estimated annual and per-installment annuity, effective annuity rate, and a comparison across purchase price slabs.

Worked Example

Suppose you are 60 years old, choose Immediate Annuity, invest a purchase price of ₹15,00,000, choose the Life Annuity with Return of Purchase Price option, and want the annuity paid yearly.

• VestingAmount = 15,00,000 (no deferment for Immediate Annuity)
• BaseRate(60) = 6.8%
• Rebate(15,00,000) = 0.30% (falls in the ₹10,00,000-₹24,99,999 slab)
• Rate = 6.8% + 0.30% = 7.10%

$$AnnualAnnuity = 15{,}00{,}000 \times 0.071 \times 0.80 \times 1.0 \approx 85{,}200$$

So this purchase price would fetch roughly ₹85,200 a year for life, with your full ₹15,00,000 purchase price returned to your nominee on death - an effective annuity rate of about 5.68% on your purchase price.