"Retire Rich!" it blared, practically leaping off the page, promising:
"Invest Rs.20 lakhs annually for 6 years only, then take a 4-year vacation from payments. From 11th year onward enjoy a GUARANTEED pension of Rs.10 lakhs every year... for your entire life!
And, there's more.
Your nominee gets back the entire Rs.1.20 crores you invested after you kick the bucket!"
Mohit's eyes widened. This is it! My golden ticket to retired royalty! Visions of luxury cruises, premium golf memberships, and smugly telling his friends, "Oh, I'm retired, but busier than ever," filled his head.
"Ramya, come here! Look at this once-in-a-lifetime deal!" he shouted to his wife, grinning like a kid in a candy store.
Now, Ramya is a born skeptic and a woman who can sniff out bad deals (and apples) faster than you could say "Eureka". So, her sixth sense kicked in before Mohit could even finish his sentence.
"This sounds too good to be true," she said, narrowing her eyes. Mohit shrugged off her skepticism. Ramya, however, wasn't about to let him leap into a shark tank without a life jacket. She whipped out her phone and fired off an SOS message to me, their unofficial financial guru.
By evening, I was at their place, to save my dear friend and his family from sure-shot financial disaster. Armed with facts and logic, I had the look of someone about to burst Mohit's shiny retirement bubble.
"Why the long face?" Mohit asked, clearly unimpressed. "This is the deal of the century!"
"Alright, sit down. Let's do some quick and very simple math, which you also are well aware of.” I said, cracking my knuckles like a mathematician about to solve the world’s toughest problem.
"Take that Rs.20 lakhs you want to invest this year. Instead of giving it to this Pension Plan, let’s say you put it in a 10-year bank cumulative fixed deposit at 6.5% interest. How much do you think it’ll grow to?"
Mohit pulled out his banking calculator with the enthusiasm of a man about to prove me wrong. "Rs.37.54 lakhs!" he announced triumphantly.
"Great!" I said. “Now, what if you did the same thing for the next five years — Rs.20 lakhs annually, each FD for one year less?"
Mohit's confidence began to wobble a bit. He started wondering what this was all about. Still, going along with my game, he calculated the amounts: Rs.35.25 lakhs, Rs.33.10 lakhs, Rs.31.08 lakhs, Rs.29.18 lakhs, and Rs.27.40 lakhs.
"Now add them all up," I said with a grin.
Mohit did the math, and his jaw dropped. “Oh, it works out to Rs.1.94 crores?! That's way more than Rs.1.20 crores!"
"Exactly!" I exclaimed. "That's YOUR money growing steadily in FDs like a mango tree in full bloom.
And guess what? If you reinvest that Rs.1.94 crores in an FD with an annual payout, you'd get around Rs.12.5 lakhs a year as against 'Rs.10 lakhs' promised by the Pension Plan. Would you be happy losing Rs.2.50 lakhs annually... and that too year after year for the next around 20-30 years?"
"But the ad says 8.33% annuity rate!" Mohit protested weakly, holding up the newspaper like a defense attorney clutching their last piece of evidence.
"Ah, the good old jargon trap," I replied. "They’re calling it an 'annuity rate', not your actual return on investment. It's a marketing trick designed to confuse people like you!" I was feeling sorry for all those who had fallen for this trap.
By now, Mohit was looking like a man who’d just realized his dream vacation was actually a day dream.
"And let’s not forget your nominee," I added. "The Pension Plan gives your daughter Rs.1.20 crores after you, uh, exit the stage. But with the FD route, she'd inherit Rs.1.94 crores. That's another Rs.74 lakhs gone if you take the Pension Plan route. You'd be robbing your own child, Mohit!"
The final blow had landed. Mohit sat there, defeated, clutching his calculator like a lifeline.
"By the way, don’t get me started on the lock-in aspect." I continued. "Once you hand over your Rs.1.2 crore, that money is as good as gone until you meet your maker. Want to withdraw funds in an emergency? Too bad. Fancy buying a holiday home in Goa? Not happening. Your financial flexibility is permanently tied up with them, all for the privilege of getting less than what you deserve.
Ramya, meanwhile, was smirking in triumph. "I told you so," her expression said without uttering a word.
Mohit muttered a grudging "thank you" to his lady luck, who simply smiled and got up to set the table for a delicious dinner.
Moral of the story? If a deal looks too good to be true, it probably is. Always do the math, or better yet, have a “Lady Luck” by your side to save you from financial folly. A Pension Plan may sound like the golden goose of retirement, but if you do the math, you might find that the goose is laying eggs of mediocrity. IT'S ALL GLITTER AND NO GOLD.
As for Mohit, he still hopes for a dream retirement — but now it involves right guidance, solid investments and a smart wife, not some glizty ads about Pension Plans, Cryptos, Futures & Options, and what not.
