HDFC Unit-linked Pension Plan is one of the simplest retirement schemes available in the market. It provides you with a very small cover or assured amount of just Rs 1,000, in the event of an untimely death.

Otherwise, the scheme is similar to a mutual fund plan except that you get a tax break under section 80 CCC (80C from the next fiscal). That will mean that the premium amount that you pay gets deducted from your income.

So, if you put in Rs 10,000 as premium, in effect your tax liability comes down by Rs 3,000 (assuming that you pay tax at the rate of 30 per cent).

From next year, you can put in larger amounts - technically you can put in up to Rs 1 lakh. On maturity, the amount you receive is tax-free. However, once you start receiving annuities, they would be taxed.

In the event of your death, your family will receive the value of the units (investments) plus Rs 1,000. There is no assured sum except for Rs 1,000.

When the policy matures, you receive part of the value of the units as cash (the exact percentage would be as specified by the regulator at that time) and for the remainder you are required to buy annuities from either HDFC [Get Quote] or any other insurer.

Currently, a maximum of one-third is allowed as cash, with annuities to be bought for the remaining two-thirds.

There is also a single premium option where the minimum you pay is Rs 25,000 and on maturity you receive the value of the units.

YOUR INVESTMENT OPTIONS You can invest in any proportion in the following funds: Liquid funds - 100 per cent in bank deposits and short-term money market instruments Secure managed funds - 100 per cent in government securities and corporate paper Defensive managed funds - 15-30 per cent in equities, the remainder in government securities and corporate paper with a high credit rating Balanced managed funds - between 30-60 per cent in equities, the rest in government and government- guaranteed security Growth funds - 100 per cent in equities You can switch in and out of funds, though you may have to pay a charge for this at a later stage

PLAN FEATURES The minimum age for investing is 18; the maximum is 60 Minimum vesting age is 50-70 Premium can be paid annually, half-yearly or quarterly Regular premium - Rs 10,000 per annum Regular premium increases Rs 5,000 per annum Initial single premium - Rs 25,000 Single premium top-up - Rs 5,000 For regular premium policies, if the premium is not paid 15 days after the due date during the first three years of the policy, the policy will be cancelled and the unit-linked fund value, less cancellation charges, will be returned. After three years, the policy can continue without further premia, subject to the minimum fund value. Surrender value: the policyholder can surrender the policy at any point of time during the contract term for regular premium paying policies and at any point of time after six months for single premium policies. The amount payable will be the unitised fund value after applying additional surrender charges. For regular premium policy, the surrender charge is 20 per cent of three years' outstanding regular premia. For example: premium = Rs 10,000 per annum, paid half-yearly (Rs 5,000 per half-year). If the policy is surrendered after 15 months, the nominee would receive Rs 15,000 as premia till that point of time. Three years' outstanding regular premia are 3 X Rs 10,000 -- Rs 15,000 = Rs 15,000. Surrender charge is 20 per cent X Rs 15,000 = Rs 3,000. Once three years of regular premiums have been paid, there are no surrender charges. If the unit fund falls below Rs 15,000 the company reserves the right to lapse the policy and pay the unit fund (less charges) to the policyholder.