The life insurance industry is bearing the brunt of a 90 per cent fall in pension business due to a special tax treatment for the New Pension System and a regulatory clause that makes it mandatory for life insurers to offer guaranteed returns to subscribers. The pension business of life insurance players is down to a meagre Rs 2,000 crore in 2014-15, from Rs 20,000 crore in 2009-10.
Pushed to the wall, the industry has called for a level-playing field. The plunge has been more pronounced since the introduction of the clause in 2009-10 which made it compulsory for life insurers to offer guaranteed returns on pension products.
The Budget provision of Rs 50,000 worth of additional tax-free incentive to NPS investment over and above the existing Rs 1.5 lakh has only made their life harder.
