Switch option

You can switch between the two funds at any point of time. One switch per year is allowed free. Every additional switch will cost you 1 per cent of the amount switched.

How it works?

Administration expenses and the life risk cover (if opted for) are deducted from the contributions and the balance is invested in one of the funds.

Each month the rate earned on the fund is deducted for investment management charges and adjusted for tax deduction at source and timing of contributions. The rate thus arrived at is used to calculate interest on a daily reducing balances. If the rate is negative (that is, if your investment account has lost value) then it can be either adjusted in the same month or carried forward to the next month and adjusted towards profit made in the subsequent month. A statement of account is provided at the end of every financial year showing your contributions, expense charges and interest on the accumulated balance.

At the end of the contributing period, up to one-third of the corpus can be commuted and the rest used to buy annuity from any annuity provider. AMP Sanmar offers three types of annuity options: Annuity payable for life, annuity payable for life with return of purchase price, and annuity payable for 5/10/15 years certain and thereafter for life.

Add on riders

You can add the Accidental Death and Disablement rider only if you choose the decreasing risk cover. The accidental cover is an additional amount payable if death occurs due to an accident, and is equal to the life cover chosen by you. In case of total and permanent disability, one-tenth of the accidental sum assured is paid at the end of each year and the premium towards the life cover is waived. If you choose to continue with the pension plan, your contributions thereon will entirely go towards the investment fund.

Exit options

The plan has a minimum three-year lock in. If the case of capital secure fund, 90 per cent of the account balance is paid if you exit the plan in the fourth year, 95 per cent in the fifth year and 100 per cent thereon. In case of the balanced fund, the account balance is adjusted for the market value of investments on the date.

Loan availability and tax benefits

No loans are given under this plan. "Bhagya Shree" is eligible for tax deduction under Section 80 CCC(1) for contributions made up to a maximum Rs 10,000 per annum.

Charges

This is an important aspect as the charges may set you back by a huge amount. The charges are:

Administrative charges: The plan levies 10 per cent on the regular contributions made in the first year, 5 per cent in the subsequent years and 5 per cent for lump sum contributions and additional top ups. This charge is deducted initially from your contributions before it is invested. For instance, if you contribute Rs 10,000 per annum, Rs 1,000 will be deducted in the first year and only Rs 9,000 is available for investment.

Life cover: This is the portion of the premium set aside towards the life cover and is applicable only if you decide to take the option.

Investment charges: This is similar to the load charged by a mutual fund. Investment charges for the capital secure fund varies between 1.50 per cent and 2 per cent, and can go up to 2.5 per cent in the case of balanced fund. These charges are quite steep and may have a considerable impact on your investment earnings.

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