Financial Guidance - Investing In Unit-linked Pension Schemes

Q.I am a 42-year-old employee of a public sector organization (B.E). I invest in equities and mutual funds as per recommendations of DSIJ. I would like to invest in unit linked pension schemes. Please let me know the merits and demerits of these schemes.
                                                                                                                                                - Uddam Nag, Vizag, AP

A. Uddam, I would like to wait for clarity on the new tax code, as it is likely to have an impact on the way annuities will be treated. The IRDA has also tightened the rules on pension plans. Let us wait to see what kinds of plans are launched by insurance companies. Presently, it is possible to buy a pension plan without life cover – but it will not be possible in the future. Even pension plans must have a life cover associated with it. If you do not need a life cover, then of course the additional costs in terms of mortality charges will be a waste for you to pay. You do realize that at the maturity of the pension plan, you will have to buy an annuity from an insurance company. At least two-thirds of the maturity proceeds will have to be used or else the proceeds will be taxed.