As Indian Seafarers, most of us working on Foreign Flag Vessels do not have any
Retirement benefits or Pension Schemes. If for some reason due to accidents or a
pandemic, we are laid off early, we struggle to maintain our Lifestyle or achieve
goals such as building a Home/ educating our children etc. or enjoying retirement.
Children will grow up and leave to live their own lives , property we built for rent may
stay empty for years and our equity investments may fail – hence planning for
retirement – pension / medical plans is a wise decision.
As a young seafarer, my father would invest my money in Insurance schemes that
offered me a guaranteed return over the next 20 years. My favorite for my larger
investments was in fixed deposits or property. In those days an NRO deposit for 3
years gave you 16% interest, which was fantastic!
If you visited a property dealer, he would quote you a rate valid for only a week as
the market was appreciating so quickly. I also had a hobby of collecting gold coins
from the country I visited (if available) and with the appreciation of Gold, that was a
As a Manager ashore, I started investing in Equity and mutual funds, however I
gained some and lost some as I could never devote enough time for following up
after investing. The Company had a Pension plan for me however not all Companies
provide adequate pension protection to Superintendents and Managers so we must
plan our retirement.
Even today, we have a large variety of investment options in the market that pay a
variety of returns. Equities and Mutual Funds have high returns but there are also
high risks and attract Capital gains taxes. In the past, property investments were
very attractive due to rental income (very low in India) and appreciation of the
property. Of late, this has lost flavour as an investment option as property markets in
India have been flat for the last 5 years and more. Having said that, having
your own home should be the highest priority once you get
Gold, Fixed deposits, Government bonds are safe investments but offer low returns.
There are several types of Pension Plans in the market that provide both an
insurance cover and good tax-free returns. I work with one of the largest pension
plan providers called Max Life Insurance and they have several schemes that
would suit your requirements as per your cash reserves and age.
If you are in the 35 to 45 age group, I would recommend investing in Insurance
linked schemes that provide an Insurance cover, a disability cover, a medical
cover and a Pension plan after a few years.
Monthly Income Advantage Plan (MIAP) Pay an annual premium for 10
years and get an Insurance cover up to 10 times the Premium for the Plan
duration (say 30 or 40 years). In such a plan you will get the monthly income
from the 11th year till the 30th or 40th year depending on the variant chosen
and at the end of that period you get a Bonus depending on Company
performance (typically 8%). This is a special plan, in that it allows you to take
an additional cover for Accident, Disability, Critical Illnesses and Waiver of
Premium for the entire term plan (30 or 40 years) thereby providing great
protection while giving you decent returns at the same time.
Smart Wealth Plan (SWP)which require premium investment for 10 years
(during which you have Life Insurance) and a guaranteed Lifetime income for
your Spouse and yourself for the next 25 years. At the end of 25 years the
premium you paid is returned back to you.
Both these plans (MIAP and SWP) are tax free and all premiums help in tax saving
under IT Rules 80 CC
If you are in the 45 to 55 age group, I would recommend you save in Tax free
Lifetime Income plans or Annuities as these require a one-time investment and
a little gestation period.
The SWP Lifetime Income Plan
Guaranteed return of 7.84% tax Free income for your Spouse and yourself.
This is a Joint Insurance plan where your Spouse and yourself are covered
for Life Insurance during the first 5 years of the Plan.
The Pension starts after the 5th year and the amount invested will return to
your Nominee after yourselves.
If you are in the 30% tax bracket you will greatly appreciate the value of a
tax-free income for Life.
As a Comparison:
The senior citizen’s Income plan from the Government pays you 7.4% interest
from the date of inception.
If this is taxed at 30% you effectively get 5.2 % return (and there is no
insurance coverage / there is a limit in amount invested etc) .
The SWP Lifetime income pays you nothing for the first 5 years, however both of
you are insured for 11.5 times the amount invested in that time. After 5 years you
start getting 7.8 % tax free income for Life, while the Senior citizen plan pays you
5.2% or less.
Investing in Annuities
In case of a Windfall income from sale of property or inheritance or Gratuity, you can
consider investing in an Annuity for your Spouse and yourself.
An Annuity can be designed to pay an immediate pension or you can defer
the payment for 5 or 10 years. The longer the deferment, the higher the rate
The income from Annuities is guaranteed for life and will accrue to both
partners. During the deferment period the policy holder is insured up to twice
the Premium amount and after yourselves the Premium invested will be
returned to your Nominee.
Annuities are taxed at same rate as FD’s, Rental Income etc. so the actual
sum in hand will be lower.
In case of any questions or clarifications, you can call me at +91
8754485933 or email me at email@example.com