The unit-linked pension market is slowly coming back to life for life-insurance companies following regulatory changes.
Private life-insurance companies have not launched any unit-linked pension plan in the last one year, as the regulator had mandated a minimum annual guarantee of 4.5 per cent. Public-sector insurance behemoth Life Insurance Corporation of India (LIC) was the only insurer offering pension products during the period.
Change in regulations
However, with an amendment allowing assured benefit and the regulator showing some urgency in disposing product approvals, the insurers are now encouraged to launch products. In the last couple of months, LIC and ICICI Prudential Life Insurance have launched pension products during the crucial tax-saving period, when insurers log almost a third of the sales during the year.
The slowdown in pension products started in September 2010, when the Insurance Regulatory and Development Authority (IRDA) came out with new regulations on pension products, mandating a minimum annual guarantee of 4.5 per cent. Following this regulation, unit-linked pension plans from private insurers disappeared from the market.
After several discussions with life insurers, the Life Insurance Council presented its views to the regulator. In January last year, the regulator amended the guidelines on unit-linked pension plans whereby insurers now had to guarantee an assured benefit in the form of a rate of return that would have to be disclosed upfront.
HDFC Life Insurance and ICICI Prudential recently launched their plans after the new rules came in.
Reliance Life Insurance and Birla Sunlife Insurance have already filed for their products with the regulator.