Indians are putting aside greater amounts towards meeting their needs post retirement. Ticket sizes of pension plans have tripled in the past nine months, since last year's budget made them a part of deductions under section 80 c. Average ticket size per policy now stand at Rs 35,000 as against Rs 10,000 less than a year ago.

Bert Patterson, MD, Aviva Life Insurance says, “Our pension business has also grown commensurately. In terms of average ticket size, we have seen 25% growth over the same period last year. As we speak our average ticket size is about Rs 55000.”

When section 80C was introduced in budget 2005, the sub limit of Rs 10,000 in pension plans stayed as they come under 80C. In last year's budget, a clarification was made that investments upto Rs 1 lakh in pension plans will enjoy same tax benefits as other sec 80C saving instruments.

Shikha Sharma, Managing Director, ICICI Pru Life says, “As you know last year, there was anomaly in the taxation and while the 80C limit was raised to Rs 1 lakh the limit for pension plans was kept at Rs 10,000. So that actually restricted the market for pension and since that restriction was lifted in this budget we are seeing more natural demand and growth of pension sector.”

Experts say that while investing tax is the biggest concern for Indian investors. However, increased awareness of retirement planning is also one of the reasons why investors are lapping up pension plans.

Author: Anumeet Kaur Bedi and Hiral Sachde