Know the difference: Participating and Non Participating Pension Plans

Preparing the future and securing life financially is important for everyone because emergencies do not know you before occurrence.

It is a human’s tendency to get more by giving less. Individuals believe they get double the returns after making investments. In India, the maximum limit on pension is 50% of the highest pay in the Government of India. At present the limit is Rs.1,25,000 per month.

Well, the present cost of living can be way higher than this amount for many. This is why saving money for the future is important for everyone. If you are looking to have a safe life after retirement, it is important that you buy a retirement insurance plan.

Why? Before you find out the reasons for looking for a pension plan, it is relevant that you understand more about the retirement insurance policy or pension plan.

What is a pension plan?

A retirement insurance policy is also called a pension plan. It is the life insurance policy that provides you financial security when your active income stops.These are insurance led savings schemes that provide you life cover along with the option to save for future after retirement. 

The policy provides life cover as well as maturity benefit. If during the policy period anything happens to the life insured, the insurance company will pay the nominee/spouse the death benefit. 

How can a pension plan help?

A pension plan can help you to battle and be prepared for the unexpected financial expenses. Some other ways in which the pension plan can help you include:

  1. You need financial security so that you continue to live in the same manner as today. With a pension plan you can maintain your lifestyle.
  2. A pension plan can help you to pay off the loan liabilities if any are pending. Even after retirement, you may have to fund the education or marriage of your younger child. To manage the expenses then, owning a pension plan is important.
  3. The pension plan provides you with regular income. It enables you to manage the expenses or take up new adventures or a hobby conveniently. 
  4. With a retirement insurance policy, you prevent the savings from draining in case of any emergency. The insurance policy protects the family financially.
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After you have understood how a retirement insurance plan helps, it is time to read about the participating and non-participating pension plans.

What is a participating pension plan?

A participating insurance plan is one in which the insured receives a bonus declared by the insurance company. It is the guaranteed additions that are made to the sum assured. The bonus component in the policy could be reversionary bonus. It is declared by the insurance company only if the profits are earned in a year.

The retired person who has purchased the insurance plan is the participant in the pension plan. They will receive the distributions from the defined-benefit plan. In case of death, beneficiary or dependent as declared by the insured will receive the death benefit.

What are non-participating pension plans?

Non-participating pension plan is the insurance policy in which no profits are shared and no dividends are divided amongst the policyholders. In short, you can say that it is a policy without profit. 

It is crucial to understand the difference between the participating and non-participating plans before buying the insurance policy.

Let us next read the difference between the two,

Particulars Participating Plan Non-Participating Plan
Bonus A participating plan comes with the bonus that is declared by the insurance company. A non-participating plan comes without bonus or dividend.
Payment Frequency Yearly basis Not applicable.
Flexibility A participating plan is quite flexible as the payouts are more than the guaranteed sum assured. The flexibility under the non-participating plan is less. These plans are rigid.
Risk and Returns The risk of returns under the participating insurance is directly proportional to market performances as they are market-linked products. The returns are secured under the non-participating plans. Both the premium and the maturity amount is protected.
Benefits  A participating pension plan comes with the guaranteed benefits along with the ones that do not have a guarantee. On the other hand, a non-participating plan provides only the guaranteed benefits. 
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Best Retirement Pension Plan You Can Buy In 2022.

This is the best retirement pension plan that you can buy in 2022. 

ABSLI Guaranteed Annuity Plus.

  • ABSLI Guaranteed Annuity Plus is the best selling guaranteed benefits insurance policy that generates a regular stream of income.
  • It is the guaranteed lifelong income plan that provides a choice of multiple annuities.
  • The retirement pension plan gives the option to increase the annuity through top-ups.
  • The policyholder gets a regular income stream which is called annuity. The amount is paid as long as the annuitant is alive. On the death of the annuity during the policy term the annuity will be paid to the nominee till the end of the policy.
  • The pension plan gives the surrender benefit to the life insured. 


ABSLI Empower Pension Plan-SP

  • ABSLI Empower Pension Plan-SP is a single premium pension plan that helps you control the life after retirement.
  • The product is linked to the market fluctuations which is why the non-guaranteed returns under the plans are variable.
  • Under the retirement plan, the policy offers guaranteed additions to boost your corpus.
  • This becomes an investment option that will suit all your financial needs.
  • It is a single premium policy, the amount of which you can choose.

Whether single premium or regular pay, both the pension plans offer tax benefits to the policyholder.


A participating pension plan is a win-win investment option for the secured future. The policy provides life cover, tax benefit and option to create huge funds for life after retirement. A pension plan saves your family from the financial stress of medical emergencies or an undue increase in the liabilities. Buy a retirement insurance policy to live the golden years of life with the same confidence and independence like before.

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Make sure that prior to buying the retirement insurance, you can consider several important factors like type of the plan, know the corpus amount you would need, the pension amount that you would require, premium payment period, and other benefits offered. To know more about the retirement plan, you can read here.

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