Looking for a safe retirement option that guarantees you a regular income without the stress of market fluctuations? The LIC Smart Pension Plan is one such scheme that promises lifelong annual payouts — and many are curious about whether an investment of just ₹1 lakh can secure ₹12,000 every year for life.
In this detailed guide, we’ll break down how this plan works, how realistic that ₹12,000 payout is, and what professionals and everyday investors alike should consider before investing.
LIC Smart Pension Plan
| Feature | Details |
|---|---|
| Plan Name | LIC Smart Pension Plan |
| Type | Non-linked, Non-participating, Single Premium Annuity |
| Minimum Investment | ₹1,00,000 |
| Minimum Annuity (Annual Payout) | ₹12,000 per year |
| Eligibility Age | 18 to 100 years (based on annuity option) |
| Annuity Options | Single Life and Joint Life |
| Annuity Modes | Monthly, Quarterly, Half-Yearly, Annually |
| Guaranteed Returns? | Yes – Fixed payouts for life |
The LIC Smart Pension Plan is a trustworthy and low-risk retirement income solution, ideal for individuals who prioritize guaranteed income over aggressive returns. While the claim of earning ₹12,000 per year on a ₹1 lakh investment may not reflect the full picture, the plan does deliver stable and lifelong payouts that many investors find reassuring.
To make the most of your investment, consult an LIC advisor, understand your annuity options, and use official annuity calculators to align expectations with actual outcomes.
What Is the LIC Smart Pension Plan?
The LIC Smart Pension Plan, officially known as LIC’s New Jeevan Shanti (Plan No. 858), is a single premium annuity product. This means you invest once and receive guaranteed regular income for life, starting immediately or after a deferment period (depending on your choice).
It’s ideal for those nearing retirement or individuals looking for safe, fixed-income options with zero exposure to equity markets.
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Can You Really Get ₹12,000 Every Year on ₹1 Lakh Investment?
The claim that you can earn ₹12,000 annually (i.e., 12% return) from a ₹1 lakh investment is a bit misleading. Here’s the truth:
- As of March 2025, LIC’s annuity rates vary based on age, type of annuity chosen, and payment frequency.
- A 60-year-old investor opting for an immediate annuity (Single Life) can expect a yearly payout between ₹6,500 and ₹7,500 per ₹1 lakh invested.
- To get ₹12,000 annually, you may need to invest closer to ₹1.6–₹1.8 lakh, depending on your age and the annuity option.
Example Calculation:
If a 60-year-old opts for annual payouts, the current annuity rate is around 7.2%, giving:
- ₹7,200 yearly from a ₹1 lakh investment.
- To receive ₹12,000/year, you’d need to invest approx ₹1.66 lakh.
How the LIC Smart Pension Plan Works
Step 1: Choose Annuity Option
You can select between:
- Single Life Annuity: Pension is paid until the annuitant passes away.
- Joint Life Annuity: Pension continues to spouse after the annuitant’s death.
Step 2: Pick the Payment Mode
You can receive payments:
- Monthly
- Quarterly
- Half-Yearly
- Annually
(Annual payouts typically offer slightly higher rates.)
Step 3: Make a One-Time Investment
You must invest at least ₹1,00,000 as a lump sum. There is no upper limit.
Step 4: Receive Pension for Life
Once the plan starts, you’ll receive guaranteed income for the rest of your life (and your spouse’s, if joint annuity is chosen).
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Pros and Cons of LIC Smart Pension Plan
Pros
- Guaranteed Lifetime Income – Predictable returns.
- Zero Market Risk – Not linked to the stock market.
- Tax Benefits – Investment may qualify under Section 80CCC.
- Flexible Payouts – Monthly to annual options.
- Joint Life Option – Secures spouse’s income too.
Cons
- Lower Returns Compared to Mutual Funds or NPS
- No Liquidity – Once purchased, the principal cannot be withdrawn.
- Payouts Taxable – Annuity income is taxed under “Income from Other Sources.”
Who Should Consider This Plan?
The LIC Smart Pension Plan is ideal for:
- Retirees seeking stability
- Senior citizens without active income
- Professionals who want to diversify retirement income sources
- Risk-averse investors looking for guaranteed returns
It’s not recommended for those who:
- Want high growth or inflation-beating returns.
- Prefer flexible withdrawal or early redemption options.
How Does It Compare With Other Retirement Options?
| Feature | LIC Smart Pension Plan | NPS | Mutual Funds |
|---|---|---|---|
| Risk | Very Low | Moderate | High |
| Returns | 6%–7.5% (fixed) | 8%–10% (market-linked) | 10%+ (market-linked) |
| Liquidity | None | Partial | High |
| Tax on Returns | Taxable | Partial Exempt | Taxable |
Verdict: LIC’s plan is a good core retirement product, especially if you value guaranteed income over growth.
Where and How to Buy the LIC Smart Pension Plan?
You can purchase the plan through:
- LIC Agents or Branch Offices
- Online via LIC’s portal
Make sure to use LIC’s annuity calculator to estimate your returns before investing.
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LIC Smart Pension Plan FAQs
Q. Is ₹12,000 per year guaranteed on ₹1 lakh investment?
Not exactly. You would need to invest more than ₹1 lakh — around ₹1.6–₹1.8 lakh — to receive ₹12,000 annually.
Q. Is the income from the LIC Smart Pension Plan taxable?
Yes, the annuity received is fully taxable under “Income from Other Sources.”
Q. Can I surrender the plan or withdraw my money?
No. Once you buy the plan, you cannot withdraw the principal. However, in certain cases (terminal illness, critical care), surrender value may be offered.
Q. Is this plan better than a fixed deposit (FD)?
It depends. LIC’s annuity rate is lower than many FD rates (which go up to 7.5%–8% in some banks), but the lifelong guarantee and zero renewal hassle make it a safer bet for retirees.
Q. Can NRIs invest in the LIC Smart Pension Plan?
Yes, selected annuity options under the LIC Smart Pension Plan are available for Non-Resident Indians (NRIs) as well.
