Hello, I need guidance for 2 concerns, since I have resigned and existing from NPS I have to compulsorily purchase annuity for 80% of NPS value, which companies annuity plan is best, Aditya Sunlife, LIC, India first, ...pls guide as the purchase value will be around 12Lacs. 2- I'll be getting around 10Lacs lumpsum, where to and how to invest considering the fact I may not go back to work ever again and I want this funds to grow and create a good wealth for my future, as of now I am 44 years old. Kindly guide

Ans: Hello;

While selecting annuity service provider apart from higher rate of annuity, due importance must be given to the solvency ratio, strong parentage, company having management and board committed to high standards of ethical conduct and integrity.

To retain neutrality of this forum, we are not in a position to recommend any specific insurer however if you search based on above factors, you will surely be able to find the best for your requirement.

Best wishes;

Ans: Hello;

Point wise answers to your queries as given below:

1. Yes.
2. Yes.
3. If you do monthly annuity the rate will be lower but you get monthly payouts. In yearly the rate will higher but only one shot payment per year so it depends on your preference.

4. Cannot comment on suitability of xyz firm.

5. Consider an insurer which has good capital adequacy, growing profitable business, preferably listed, reputation of the owner/group apart from decent annuity rates on offer.

6 & 7. My suggestion would be to opt for annuity for life with ROP to your nominee. Ultimately it is your call.

Please have adequate healthcare insurance cover.

Best wishes;

Ans: You have done very structured investing and created strong wealth. At 53, planning retirement at 63 with Rs.1.5 lakhs monthly target is practical. Your portfolio size is already substantial and gives you flexibility. You are also rightly evaluating different income options. Let us analyse from all angles and provide you with a 360-degree perspective.

» Present financial strength

– PPF of Rs.55 lakhs gives safe, tax-free income support.
– EPF of Rs.36 lakhs is a strong retirement base.
– Mutual funds of Rs.5.5 crores form the biggest growth driver.
– Superannuation and gratuity of Rs.14.5 lakhs add steady support.
– NPS of Rs.17 lakhs is a start, though not very large.
– SIP of Rs.2 lakhs monthly adds immense compounding over next 10 years.
– FD of Rs.10 lakhs and gold of Rs.16 lakhs diversify safety and hedge.
– You are well protected with insurance, so assets are purely for retirement.

» Why annuity products look attractive

– Annuity gives guaranteed income for life.
– But annuity rates in India are quite low.
– Once invested, money is locked, with no liquidity.
– Inflation eats into fixed annuity income.
– For 25–30 year retirement, annuity gives certainty but reduces growth.
– You may feel safe with annuity, but real value drops with time.

» NPS active contribution option

– You plan Rs.1.5 lakhs monthly into NPS till 63.
– With 75% equity and 25% debt, growth potential is high.
– NPS gives tax benefit, but at withdrawal, 40% compulsory annuity is mandatory.
– That annuity portion will earn very low IRR, around 5–6%.
– Flexibility is less, as NPS rules restrict free usage of corpus.
– Your estimate of Rs.75,000 monthly annuity is realistic.
– But compared to mutual fund SWP, long-term income will be less.
– NPS suits those with limited discipline, but you already show financial maturity.

» SWP as income stream

– SWP from mutual funds is flexible and liquid.
– You can decide the withdrawal amount and frequency.
– Portfolio continues to grow while you withdraw.
– It is inflation friendly, as corpus is still invested in growth assets.
– Taxation is important: equity MF gains beyond Rs.1.25 lakhs LTCG taxed at 12.5%.
– STCG on withdrawals below 12 months holding is taxed at 20%.
– Still, overall taxation is lower than annuity taxation (full income tax on annuity).
– SWP also allows you to stop, pause, or increase later.
– It balances growth and income, unlike annuity which is rigid.

» HDFC life smart pension plus

– This is an insurance-linked pension product.
– IRR is around 6% only.
– You plan to invest Rs.30 lakhs yearly for 5 years, total Rs.1.5 crores.
– Annual annuity of Rs.15 lakhs means only 6% return, taxable fully.
– Liquidity is zero, you cannot access your money.
– Flexibility is lost, while better returns possible in mutual funds.
– Such products benefit insurance companies more than investors.
– Locking large amounts in such low-return product is not advisable.

» Tax comparison across options

– Annuity: taxed fully as income, no exemption, no indexation.
– SWP: equity gains taxed at 12.5% LTCG after Rs.1.25 lakhs limit.
– Debt MF SWP taxed as per income slab, so less efficient.
– NPS: lumpsum 60% tax-free, but 40% annuity fully taxable.
– Clearly, SWP from equity MF is most tax efficient in long run.

» Risk and inflation factors

– Retirement may last 25–30 years.
– Fixed annuity loses value due to inflation.
– SWP with equity exposure grows with inflation, keeping income relevant.
– PPF and EPF give some cushion but interest may reduce in future.
– Portfolio mix of growth and safety ensures both income and protection.

» Suggested approach

– Avoid locking too much in annuity products.
– Continue SIPs in equity mutual funds till 63.
– Shift part of equity gains to debt near retirement for safety.
– At 63, use SWP from mutual funds as primary retirement income.
– Keep PPF and EPF for safe drawdown later years.
– Keep NPS contributions moderate. Rs.1.5 lakhs monthly is too heavy.
– Instead, strengthen mutual funds for flexibility and growth.
– Maintain emergency corpus outside these investments.
– Review yearly with a Certified Financial Planner to adjust asset allocation.

» Final Insights

You are already on a very strong path. With your existing corpus and SIPs, you can comfortably generate Rs.1.5 lakhs per month from age 63. NPS heavy contribution will reduce flexibility and force you into annuity. SWP gives better growth, tax efficiency, and liquidity. Insurance-linked pension products like HDFC Pension Plus offer low returns and low flexibility, hence not suitable. Your focus should be on expanding mutual fund base, balancing with debt funds, and creating a flexible SWP withdrawal strategy. This approach secures income, manages tax, and keeps your retirement lifestyle safe against inflation.

Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in

https://www.youtube.com/@HolisticInvestment

Ans: Hi,

I understand your concern of getting annuity to cover your expenses post retirement. And I appreciate your research.
Your overall numbers look quite good and these can last forever along with a huge inheritance to your family.

Now coming to annuity options, I would recommend option 2 for you. A SWP option would be best keeping in mind several factors:
1. You already have a huge mutual fund portfolio. It will be redesigned using a strategy into a mix of equity and hybrid and debt funds. You will get your monthly payout and your rest amount will continue growing as per the market making your corpus to grow forever.
2. You can change (increase or decrease or redesign) your entire portfolio as per your wish at any time post retirement.
3. This strategy can easily fetch you a return of 11% yearly which neither NPS nor HDFC pension plus will give.
4. Regarding tax, it would only be applicable to the monthly takeout done by you. Even NPS annuity and HDFC plans are taxable post retirement. So you need not worry about any tax as all will be same for you.

Hence 2nd SWP option suits you the best.

Lastly, with such a huge corpus and to plan a proper retirement plan for you, kindly consult a Certified Financial Planner - a CFP who can guide you with exact funds to invest in keeping in mind your age, goals and risk profile.

Best Regards,
Reetika Sharma, Certified Financial Planner
https://www.instagram.com/cfpreetika/