Annuity, A New Curiosity Shop

Inflation, the villainous blackguard, has finally taken a toll on one of India’s most orthodox cornerstones of retirement planning – annuities. The pension regulator has done away with the provision that annuities would have to be purchased by all NPS (National Pension Scheme) subscribers. The rule has now spared those whose pension corpus is less than Rs 5 lakh; they have been allowed to withdraw the entire amount on retirement. That, of course, happens to be the raw news. The reality is that an annuity purchased with a relatively modest amount – Rs 5 lakh in this case – would not fetch you anything meaningful in the current scenario. At any rate, your yield from the same would be comparatively insignificant, thanks to fairly high inflation numbers. That brings us straight to a bigger issue: the relevance of annuities in the modern context. This has helped...