Good or Bad? An Insightful Review

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Can the Bajaj Allianz Life Guaranteed Pension Goal II Plan offer the steady income needed for a comfortable post-retirement life?

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Can the Bajaj Allianz Life Guaranteed Pension Goal II Plan secure your financial independence during your golden years and offer lifelong annuity options?

Can the Bajaj Allianz Life Guaranteed Pension Goal II Plan provide guaranteed returns that could shield you from market volatility during retirement?

This article evaluates the plan, exploring its features, benefits, drawbacks, and potential returns through an IRR analysis. By offering in-depth insights, this review aims to help you assess whether this plan aligns with your retirement planning objectives.

What is the Bajaj Allianz Life Guaranteed Pension Goal II Plan?

Bajaj Allianz Life Guaranteed Pension Goal II Plan is a Non-Linked, Non- Participating, Deferred and Immediate Annuity plan. Bajaj Allianz Life Guaranteed Pension Goal II Plan assures your Lifestyle goals by giving guaranteed income throughout life as per your choice and need.

What are the features of the Bajaj Allianz Life Guaranteed Pension Goal II Plan?

The Bajaj Allianz Life Guaranteed Pension Goal II Plan provides a guaranteed lifelong income tailored to your preferences and requirements.
It offers both immediate and deferred annuity options to suit your financial goals.
You can opt for the Return on Purchase Price (ROP), receiving the invested amount back either as a survival benefit or upon death.
The plan allows you to include your spouse, ensuring 50% or 100% of the annuity is payable to them after your demise.
It features nine immediate annuity options and six deferred annuity options, giving you flexibility to choose based on your unique needs.

Who is eligible for the Bajaj Allianz Life Guaranteed Pension Goal II Plan?

What are the annuity options and the benefits of the Bajaj Allianz Life Guaranteed Pension Goal II Plan?

Option	Immediate Annuity	Deferred Annuity (Single Pay)	Deferred Annuity (Regular Pay)
Option A: Life Annuity	✔	✔	✔
Option B: Life Annuity with Return of Purchase Price (ROP) on death	✔	✔	✔
Option C: Annuity certain and life thereafter	✔	✖	✖
Option D: Joint Life Last Survivor with 50% of Annuity to spouse	✔	✖	✖
Option E: Joint Life Last Survivor with 100% of Annuity to spouse	✔	✖	✔
Option F: Joint Life Last Survivor with 100% of Annuity to spouse and with Return of Purchase Price (ROP) on the death of Last Survivor	✔	✔	✔
Option G: Life Annuity with Return of Purchase Price (ROP) on death or survival	✔	✔	✖
Option H: Life Annuity with Return of Purchase Price (ROP) on death or in instalments on survival	✔	✔	✖
Option I: Family Pension: (Only for NPS subscribers)	✔	✖	✖

You can choose from any of the following Annuity options at inception. The option once chosen at inception, cannot be changed during the Bajaj Allianz Life Guaranteed Pension Goal II Plan Policy term.

Immediate Annuity – Annuity starts immediately Premium payment – Single premium
Option	Annuity payable	Death benefit
Option A: Life Annuity	As long as the annuitant is alive	NIL
Option B: Life Annuity with Return of Purchase Price (ROP) on death	As long as the annuitant is alive	X% of the Purchase price will be returned to the nominee
Option C: Annuity certain and life thereafter	Till the guaranteed period of 5, 10, 15 or 20 years, or throughout life, whichever is later	On death during the Annuity-Certain Period, the remaining Annuity instalments will be paid
Option D: Joint Life Last Survivor with 50% of Annuity to spouse	As long as the annuitant is alive and thereafter, the spouse will receive 50% of the prevailing Annuity throughout his/her life	NIL
Option E: Joint Life Last Survivor with 100% of Annuity to spouse	As long as the annuitant is alive and thereafter, the spouse will receive 100% of the prevailing Annuity throughout his/her life	NIL
Option F: Joint Life Last Survivor with 100% of Annuity to spouse and with Return of Purchase Price (ROP) on the death of Last Survivor	As long as the annuitant is alive and thereafter, the spouse will receive 100% of the prevailing Annuity throughout his/her life	On the death of the Last Survivor, X% of the Purchase Price will be returned to the nominee
Option G: Life Annuity with Return of Purchase Price (ROP) on death or survival	As long as the annuitant is alive	NIL. Survival benefit – on the policy anniversary after the 25th Policy Year or the policy anniversary after attaining Age 85 (whichever is later), the Purchase Price will be returned to you as a Survival benefit with the annuity continuing subsequently.
Option H: Life Annuity with Return of Purchase Price (ROP) on death or in instalments on survival	As long as the annuitant is alive	On death, an amount equal to the Purchase Price less the sum of the Survival benefit paid (if any) shall be paid to the nominee. Survival benefit – starting from the policy anniversary after the 15th Policy Year or the policy anniversary after attaining Age 70 (whichever is later), Survival benefit would be payable to you at each policy anniversary (5% of purchase price), with Annuity continuing subsequently
Option I: Family Pension: (Only for NPS subscribers)	Similar to option F	Similar to option F

Deferred Annuity – Annuity starts post-deferment period. On death during the Deferment Period, an amount equal to 105% of the Total Premiums Paid, shall be paid to the nominee
Option	Premium payment	Annuity payable	Death benefit
Option A: Life Annuity	Single premium, Regular premium	As long as the annuitant is alive	NIL
Option B: Life Annuity with Return of Purchase Price (ROP) on death	Single premium, Regular premium	As long as the annuitant is alive	X% of the Purchase price will be returned to the nominee
Option E: Joint Life Last Survivor with 100% of Annuity to spouse	Regular premium	As long as the annuitant is alive and thereafter spouse will receive 100% of the prevailing Annuity throughout his/her life	NIL
Option F: Joint Life Last Survivor with 100% of Annuity to spouse and with Return of Purchase Price (ROP) on the death of Last Survivor	Single premium, Regular premium	As long as the annuitant is alive and thereafter spouse will receive 100% of the prevailing Annuity throughout his/her life	On the death of the Last Survivor, X% of the Purchase Price will be returned to the nominee
Option G: Life Annuity with Return of Purchase Price (ROP) on death or survival	Single premium	As long as the annuitant is alive	NIL. Survival benefit – on the policy anniversary after the 25th Policy Year or the policy anniversary after attaining Age 85 (whichever is later), the Purchase Price will be returned to you as a Survival benefit with the annuity continuing subsequently.
Option H: Life Annuity with Return of Purchase Price (ROP) on death or in instalments on survival	Single premium	As long as the annuitant is alive	On death, an amount equal to the Purchase Price less the sum of the Survival benefit paid (if any) shall be paid to the nominee. Survival benefit – starting from the policy anniversary after the 15th Policy Year or the policy anniversary after attaining Age 70 (whichever is later), Survival benefit would be payable to you at each policy anniversary (5% of purchase price), with Annuity continuing subsequently

Grace Period, Paid-up and Revival of the Bajaj Allianz Life Guaranteed Pension Goal II Plan

(Only applicable under the Deferred Annuity – Limited / Regular pay options)

Grace period

The grace period is 30 days for payment frequencies other than a monthly mode of payment and 15 days for a monthly frequency mode of payment.

Paid-up policy

If you have not paid at least one (1) full year’s Premium, the Bajaj Allianz Life Guaranteed Pension Goal II Plan Policy will be converted to a lapsed Policy at the end of the Grace Period, and no benefit will be payable.

If you have paid at least one (1) full year’s Premium and subsequent Premiums have not been paid, your Bajaj Allianz Life Guaranteed Pension Goal II Plan Policy will be converted to a Paid-up Policy at the end of the Grace Period.

Revival

Revival can be done within five (5) years of the due date of the first unpaid Premium and before the end of the Deferment Period.

Free Look Period of the Bajaj Allianz Life Guaranteed Pension Goal II Plan

If the policyholder disagrees with any of the terms and conditions, he/she will have the option to return the Policy within 30 days of the date of receipt of the policy document, whether received electronically or otherwise.

Surrendering the Bajaj Allianz Life Guaranteed Pension Goal II Plan

For Immediate Annuity

The Surrender Value will be the Special Surrender Value (SSV)

For Deferred Annuities

On surrender during the deferment period – the Surrender Value will be higher of the Guaranteed Surrender Value (GSV) or the Special Surrender Value (SSV).

On surrender after the deferment period- the Surrender Value will be the Special Surrender Value (SSV).

Surrender Value is applicable

Under Annuity Options B, F, G, H and I during the Annuity period (for immediate and deferred Annuity).

All annuities during the deferment period (under deferred Annuity).

What are the advantages of the Bajaj Allianz Life Guaranteed Pension Goal II Plan?

The plan offers customization options to suit your needs, including flexibility in the premium payment term (accumulation phase) and the annuity period (distribution phase).
Enjoy guaranteed income for life, ensuring financial stability.
You can adjust the annuity payment frequency and premium payment frequency at any policy anniversary for added convenience.

What are the disadvantages of the Bajaj Allianz Life Guaranteed Pension Goal II Plan?

The annuity amount remains fixed for life and does not account for inflation.
Certain annuity options are restricted to Immediate Annuity and Single-Pay Deferred Annuity plans.
The annuity rate is locked at the time of policy inception.
Annuity payouts are taxable according to your applicable income tax slab rate.
The plan can only be surrendered under specific variants.

Research Methodology of Bajaj Allianz Life Guaranteed Pension Goal II Plan

Calculating the Internal Rate of Return (IRR) can help evaluate whether this Bajaj Allianz Life Guaranteed Pension Goal II Plan meets your long-term financial needs.

By comparing the IRR with other investment options, you can make an informed decision. Let’s analyse the IRR based on an example provided in the policy brochure.

Benefit Illustration – IRR Analysis of the Bajaj Allianz Life Guaranteed Pension Goal II Plan

For a 60-year-old male, the purchase price under a single premium is ₹25 lakhs. He opts for Plan Option B: Life Annuity with Return of Purchase Price (ROP) on death, with annual payouts.

Assuming a life expectancy of 85 years, he receives an annual annuity of ₹1,55,500. At age 85, the purchase price is returned to the nominee.

Male	60 years
Purchase Price	₹ 25 Lakhs
Life Expectancy	85 years
Annuity (per annum)	₹ 1,55,500

Age	Option B: Life Annuity with Return of Purchase Price (ROP) on death
60	-25,00,000
61	1,55,500
62	1,55,500
63	1,55,500
64	1,55,500
65	1,55,500
66	1,55,500
67	1,55,500
68	1,55,500
69	1,55,500
70	1,55,500
71	1,55,500
72	1,55,500
73	1,55,500
74	1,55,500
75	1,55,500
76	1,55,500
77	1,55,500
78	1,55,500
79	1,55,500
80	1,55,500
81	1,55,500
82	1,55,500
83	1,55,500
84	1,55,500
85	25,00,000

IRR	6.11%

For these cash flows, the IRR is calculated at 6.11% as per the Bajaj Allianz Life Guaranteed Pension Goal II Plan maturity calculator.

In comparison, a bank Fixed Deposit (FD) could provide a higher return while also offering access to the invested corpus. Annuity plans, on the other hand, lock your funds.

Therefore, the Bajaj Allianz Life Guaranteed Pension Goal II Plan falls short in terms of both yield and liquidity. Better alternatives with higher returns and greater flexibility are available, which we will explore in the next section.

Bajaj Allianz Life Guaranteed Pension Goal II Plan Vs. Other investment

This section explores how to effectively utilize your retirement corpus to generate a steady income stream while retaining greater control over your investments.

These alternatives not only provide better returns but also allow you to customize cash flows according to your needs.

Bajaj Allianz Life Guaranteed Pension Goal II Plan Vs. Fixed-Income Investment Options

Here are some fixed-income investment options and their expected rates of return as of Dec 2024:

Investment Option	Expected Returns
Bank Fixed Deposit (FD)	6-7% p.a.
Senior Citizen Savings Scheme (SCSS)	8.20% p.a.
RBI Floating Rate Savings Bond	8.05% p.a.

1. Bank Fixed Deposit (FD): A secure choice for retirees to earn a fixed interest rate, ensuring regular and predictable income.

2. Senior Citizen Savings Scheme (SCSS): A government-backed scheme offering higher interest rates for seniors, providing regular income with low risk.

3. RBI Floating Rate Bonds: Government bonds with interest rates linked to market rates, offer the potential for higher returns and regular payouts, albeit with some interest rate risk.

These options offer liquidity, allowing access to your corpus as needed. However, they do not account for inflation, which can erode purchasing power over time. This limitation can be addressed by including equity in your portfolio for growth potential.

Bajaj Allianz Life Guaranteed Pension Goal II Plan Vs. Inflation-adjusted income

Using the same example from the Bajaj Allianz Life Guaranteed Pension Goal II Plan, let’s consider a retirement corpus of ₹25 lakhs with an initial annual withdrawal of ₹1.55 lakhs.

– Allocation:

– ₹15 lakhs (60%) in equity for long-term growth.

– ₹10 lakhs (40%) in debt instruments for regular income.

– Expected Returns:

– Equity: 12% annual return.

– Debt: 6% annual return.

The first-year withdrawal is ₹1.55 lakhs. To combat inflation, withdrawals increase by 6% every 5 years. Every 5 years, the debt portion is replenished by transferring funds from the equity portion.

This rebalancing ensures that equity growth offsets inflation, while debt supports regular income. At age 71, the final transfer from equity to debt is made to maintain stability.

Age	Equity Portion			Shift from Equity to Debt	Debt Portion
Age	Opening Balance	Yearly withdrawal	Closing Balance	Shift from Equity to Debt	Opening Balance	Yearly withdrawal	Closing Balance
61	15,00,000	–	16,80,000	–	10,00,000	1,55,500	8,95,170
62	16,80,000	–	18,81,600	–	8,95,170	1,55,500	7,84,050
63	18,81,600	–	21,07,392	–	7,84,050	1,55,500	6,66,263
64	21,07,392	–	23,60,279	–	6,66,263	1,55,500	5,41,409
65	23,60,279	–	26,43,513	–	5,41,409	1,55,500	4,09,064
66	26,43,513	10,00,000	18,40,734	10,00,000	14,09,064	1,64,830	13,18,888
67	18,40,734	–	20,61,622	–	13,18,888	1,64,830	12,23,301
68	20,61,622	–	23,09,017	–	12,23,301	1,64,830	11,21,979
69	23,09,017	–	25,86,099	–	11,21,979	1,64,830	10,14,578
70	25,86,099	–	28,96,431	–	10,14,578	1,64,830	9,00,733
71	28,96,431	28,96,431	-0	28,96,431	37,97,164	1,74,720	38,39,791
72	-0	–	-0	–	38,39,791	1,74,720	38,84,975
73	-0	–	-0	–	38,84,975	1,74,720	39,32,871
74	-0	–	-0	–	39,32,871	1,74,720	39,83,640
75	-0	–	-0	–	39,83,640	1,74,720	40,37,455
76	-0	-0	0	-0	40,37,455	1,85,203	40,83,387
77	0	–	0	–	40,83,387	1,85,203	41,32,075
78	0	–	0	–	41,32,075	1,85,203	41,83,685
79	0	–	0	–	41,83,685	1,85,203	42,38,391
80					42,38,391	1,85,203	42,96,379
81					42,96,379	1,96,315	43,46,068
82					43,46,068	1,96,315	43,98,738
83					43,98,738	1,96,315	44,54,568
84					44,54,568	1,96,315	45,13,748
85					45,13,748	1,96,315	45,76,479

By age 85, this strategy leaves a corpus of ₹45.13 lakhs, significantly higher than the original ₹25 lakhs. The IRR for this cash flow is 7.76%, outperforming the 6.11% IRR from the Bajaj Allianz Life Guaranteed Pension Goal II Plan, even after factoring in increased withdrawals.

Benefits of this Strategy:

Regular income to meet daily needs.
Inflation-adjusted withdrawals to sustain your lifestyle.
A corpus that outlasts your lifetime, ensuring financial security for your heirs.

This approach balances growth and stability, offering better returns and flexibility compared to annuity plans. Adjustments can be made based on individual goals and risk tolerance.

Final Verdict on Bajaj Allianz Life Guaranteed Pension Goal II Plan

The Bajaj Allianz Life Guaranteed Pension Goal II Plan is designed to provide a steady income stream for life, either immediately or after a deferment period.

With a choice of 9 Immediate Annuity options and 6 Deferred Annuity options, the plan also allows you to customize the annuity payout frequency to suit your needs.

However, an analysis of returns reveals that the plan offers relatively poor performance. It is not advisable to rely solely on this annuity as your primary source of post-retirement income.

Depending entirely on this plan may result in insufficient funds over the long term and it also has a high agent commission.

A more effective strategy for retirement planning is to adopt a diversified asset allocation approach.

This ensures a regular, inflation-adjusted income while preserving your retirement corpus. Adjustments can be made to your asset mix based on your risk tolerance and financial goals.

When it comes to financial advice, are Quora, Facebook, and Twitter the final word?

For a personalized retirement strategy, consult a Certified Retirement Planner. They can create a tailored plan that aligns with your current financial situation, risk appetite, and long-term life objectives.

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Table of Contents:

Grace period

Paid-up policy

Revival

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