Does it make sense to invest in Pension Plans?

Ten long years ago I decided to invest in a pension plan.  The scheme I chose was from HDFC.  The investment was fixed at 10 yearly installments of Rs. 10,000/= each. However there was no assurance about any minimum payout and it was going to be dictated by the market.  Back-of-the-envelope calculations showed that taking the return at 10% p.a with yearly compounding the maturity value should be Rs. 1.75 lakhs (It would be higher with quarterly compounding.)  Also the pension on this corpus at the same rate should be 17,500/= per annum if the corpus was to be returned to legal heirs on death of the pension holder.  In case the annuitant chose for annuity without any return of corpus on his death, the return should be even higher.

All the calculations have fallen flat on the ground.  The total maturity value was Rs. 1.4 lakh approximately.  Here is what was offered to me by HDFC on maturity (PLEASE ZOOM TO 200%):

And lest you should forget, let me remind you that this annuity income is liable to be taxed in your hand.  This means a deduction of 10 to 30 percent depending on your other income.

To top it all, during the past few years I was being charged service tax on the annual premium paid by me.  Then again I have had to pay service tax on the amount being invested in annuities.  The tax on a investment in annuities of Rs. one lakh comes to Rs. 3,019.

I have chosen to invest the mandatory portion of annuity purchase with LICI who are offering a very slightly  higher annuity.  This could be possible under the Open Market Option which has to be compulsorily offered to the investor.

This raises serious doubts about the fate of the new employees being covered under "defined contribution" pension scheme which will work on these very lines.  Notwithstanding our government's dislike for it, investment in gold will be a far far superior option.  Real estate, too, will be a good or a better choice.

मोदी की दावेदारी

मोदीजी खम ठोंक कर हैं आ गए मैदान में,
मनमोहन कुर्सी पर अपनी बैठे हैं गहरे ध्यान में,
जो समझ में आई ना जनता को वह है बात यह,
क्यों देर हो रही है मोदी की अगुआई के ऐलान में.

DDS (Deep Distrust Syndrome)

Recently while in the check-out queue at a retail store I was watching a couple make payment for their purchases.  The lady took out a fresh packet of one hundred rupee notes and separated a bunch looking at the distinctive numbers.  Perhaps unsure of her arithmetic, she started counting the notes while the cashier and her husband looked on attentively.  Then she passed it on to, no, not the cashier but her husband.  He also counted the notes with the same thoroughness while the wife and the cashier looked on.  Next, of course, it was the cashier's turn to count the notes.  And the couple did focus their total attention at the cashier while he was at it.  And finally with the return of some change the payment was successfully completed and everyone in the queue heaved a sigh of relief.

I think this behavior is a symptom of the DDS (Deep Distrust Syndrome) pervading our society.  The distrust is towards organizations / institutions as well as individuals manning these.  The following also result from this DDS:

• If an accident takes place, the mob adopts a your-money-or-your-life attitude towards the driver  who may or may not be at fault.  No one believes that the system will make insurance company settle the claim of the victim.
• We don't trust our fellow citizens to honestly pay their electricity bills.  As it would be grossly unfair to have to share in the burden imposed by non-payers, we choose to join them by hook or by crook.
• We don't trust any selection process to be fair.  So everyone puts in his best efforts in influencing the process and the selectors.
• We don't trust the government to provide us good governance using the taxes collected from us.  So we try to evade paying taxes if we can.

The list could go on and on.

 

Any prescriptions for treating this DDS?

Quick comments on Budget 2013

• FMs seem to have lost all interest in senior citizens after Mr Pranab Mukherjee reduced the cut-off age from 65 to 60. This group is hardest hit by persistent inflation and screams for reducing interest rates. They deserve a higher exemption limit at the least, if not respect and gratitude for their services to the nation.

• FM says there is a bit of Azim Premji in every taxpayer. I am sure that recipients of Premji's charities do have a sense of gratitude towards him. The government hardly seems to have any towards its taxpayers.

• The pirates infesting the route along which allocations travel to intended beneficiaries must be celebrating increased allocations in the budget with great enthusiasm.

It is good to be myopic.

It was quite early in my life when I was diagnosed as myopic.  It all started when I found that my classmates could easily read things on the blackboard that I could not.  It culminated in my permanently acquiring a bespectacled look.  The only consolation was that this bespectacled look was often equated with being very studious.  But then a studious look never failed to draw the much dreaded attention of the bullies in the school.  And when that attention led to a scuffle, I had to pay more attention to defending my glasses rather than myself.

My vegetarian family got much worried over this development.  They decided to substantially enhance my quota of dairy products.  The increase was almost on the same scale as that in our legislators' salaries and perks.  Yet it failed to make any impact on the central issue of nearsightedness.  Though it impacted the central parts of my anatomy in a profound and inflationary manner.  The inflation continues unabated rendering the hope of any rate, sorry, weight cut futile.

People looking at my myopia as a handicap did at times make me feel miserable.  However with the advent of smartphones, this handicap has turned into a tremendous advantage.  Here is how.

Computing, entertainment, and communication have been converging together so a single device can offer all of these.  Simultaneously there is a trend towards miniaturization.  So desktops have become laptops, laptops have becomes netbooks and finally you have tablets that you can hold in one hand and use with the other.  Some of these tablets are phablets.  That merely means that they have the functionality of a phone too.  Now if your device, apart from being a computer, audio and video player, a camera, a radio, a clock et al, also has to be a phone, especially a mobile one, the weight and size do become important.  Lot of experimentation is going on here with all kinds of screen sizes varying from 2.8" to 10" being tried out.  I have gone for a device that is a little short of 5" mark, fits into my pocket, and may appropriately be called a mobile device.

With today's content heavy applications (apps) and screen sizes at around 5", only two categories of users can make fullest use of these gadgets.  These categories are very young and very myopic, pinch & zoom notwithstanding.  Myopics often pride themselves on being able to read even the fine print at the bottom of wristwatch dials.  (It is a different matter that while focusing on the fine print they sometimes miss the bold print much to their chagrin.)  This ability to read the fine print enables them to use these modern gadgets as much as youngsters with fine near and far sight.

A normal middle-aged person would need heavy reading glasses for the purpose.  There is a considerable risk of the pair of glasses sliding off your nose as you peer down at your phone.  The myopic, on the other hand, would just remove his glasses and use the gadget with the eyes of a new born.

Time to raise a toast to myopia.  And do keep this in mind before considering a laser correction to your eyesight.

एक मशहूर कव्वाली नए अंदाज़ में.

हमें तो लूट लिया स्कैम व घोटालों ने,

भ्रष्ट इस व्यवस्था ने, व्यवस्था चलाने वालों ने.

      यहाँ तो हर रोज एक ताज़ा घुटाला होता है,

      एक हिस्सा खजाने का रोज खोता है.

      फिर वो बढ़ाते हैं दाम और टैक्स भी मजबूरी में,

      वो बेखबर हैं क्या मिलता है हमें मजूरी में.

खुदा करे कि एक घोटाला हो विदेशी बैंकों में,

गायब हो जाएँ सब नम्बरी खाते और वो चिल्लाएं,

हमें तो लूट लिया स्विट्ज़रलैंड वालों ने,

इनके भ्रष्ट बैंकों ने और बैंकों के घोटालों ने!

My new Droid

I recently purchased a new mid-range Android phone for myself.  It is LG Optimus L-9, also code named P-765.  It has ICS (Ice Cream Sandwich) operating system, 1 GHz dual-core processor with 1 GB of RAM.  However don't be surprised if the Task Manager reports only 767 MB as the total of used and free RAM.  I checked with LG and they told that the balance is dedicated to GPU (Graphics Processing Unit.)  It has a decent 4.75 inch qHD screen and is available in black and white colors.  I went for the black one.  The internal storage is stated to be 4 GB of which 2.33 GB is available to the user for installing apps.  There is a slot for external memory card.  It can take up to 32GB.  The battery is a decent one with 2150 mAH rating.  It has a 5 MP camera and a VGA front camera.  The regular camera is capable of full HD video recording.  A FM radio is included.

The other phone that I had in mind was Samsung Galaxy Grand.  It has Jelly Bean OS, 8 MB of internal storage (4 available to user), and a 8 MP camera.  The screen is also a little bigger at 5".  However the battery has lower capacity and the display has a lower resolution.  Also it costs nearly Rs.4000/= more than L9.  But then you get a anti-glare screen and a flip case free with the phone.  These cost me an additional Rs.700/=.  An anti-glare screen is definitely recommended, especially for outdoor use.  I bought Scratchgard screen at an exorbitant price of Rs.350/=, but the results are good.  The Table-Talk flip cover that I purchased from e-Bay is okay.  The only problem is that it interferes with the proximity sensor.  The proximity sensor's job is to turn the display on when you move the phone away from your face (ears) and turn it off again if you take it close to your face.  Of course this happens during an active call only and you may take advantage of proximity sensor by folding back the flip cover instead of talking with the cover on.

Additionally you need to invest in a micro SD card.  I went for a 16 GB card instead of the maximum of 32 GB.  The cards are available in several classes - 4, 6 and 10.  The data transfer speed increases with the number of the class. A 10 GB card, I believe will provide good jitter-free HD videos.

I was baffled to note that all the apps download and install only on the internal memory.  As stated earlier you have 2.33 GB of internal memory.  LG told me that ICS and JB versions have this behavior and the external SD card cannot be used for installing applications.  Some Googling shows that it can be done but only after rooting the phone.  I don't want to do that; not during the warranty period.  But then luckily the camera application uses the card for storing photos and videos.  The card can also be used for storing your music and e-books.  A good app for reading e-books is "Cool Reader."  And of course don't forget to load the Adobe Reader for a large number of books are in PDF format.

For even more storage you can, of course, use Google Drive, Skydrive, Box etc.  The native file manager also allows you to add these as additional directories.  Google Drive offers the advantage of editing your files too if they are in the Google native formats.  It is like having full-fledged Office equivalent on your mobile.

The phone responds well to your touch commands.  It was on account of long response time that I had to upgrade to this phone.

One nice feature of ICS & JB is live wallpapers.  So you can have an aquarium or a plasma globe for a wallpaper to amuse you.  Task manager and battery optimizer come built in and there is no need for adding an app.  Google books, like Spotify and Netflix, is unfortunately not available in India.  Google music works fine on ICS, and then there are Saavn and Dhingana.

The camera is good in daylight but only average indoors.  The earphones are good for enjoying music.

Thus far it seems to be a good phone and I have configured it with my usual choice of apps from Google Play as well as LG Smartworld.

I am happy to note that LG has announced a JB upgrade for this phone during the first half of the current year.  Let us hope it comes about.

After having benefited from various reviews on the net, I thought I was morally obliged to share my own experience with the phone.  Hence this blog.