Best LIC Pension Plan 2026: Comparing LIC's Annuity Plans on Sale

The best LIC pension plan depends on two things: when you want the income to start and whether the money should go back to your family after you. LIC currently sells three immediate annuities (Jeevan Akshay VII 857, Saral Pension 862 and Smart Pension 879), one deferred annuity (New Jeevan Shanti 758) and one unit-linked pension plan (New Pension Plus 867). This guide explains how they differ and compares them with figures from LIC’s brochures and our calculators.

Independent guide: we are not LIC or an LIC agent and earn nothing from any plan named here. All five plans were on LIC’s pension plan list as on 30 September 2026. Annuity rates change from time to time, and only LIC’s quotation on the day you buy is final. No GST applies: annuity purchase prices are GST-exempt from 22 September 2025.

LIC pension plans on sale in 2026

• Jeevan Akshay VII 857: immediate annuity with ten options, A to J. Entry age 25 to 85 (up to 100 under Option F).
• Smart Pension 879: immediate annuity with 21 options, including increasing pensions and early return of the price at 75 or 80. Entry from age 18.
• Saral Pension 862: the IRDAI standard immediate annuity. Two options, single or joint life, and both return the full purchase price. Entry age 40 to 80.
• New Jeevan Shanti 758: deferred annuity. Pay once, wait 1 to 5 years, then a fixed pension for life.
• New Pension Plus 867: a unit-linked plan for building a retirement fund before you buy a pension.

Immediate vs deferred annuity

An immediate annuity turns a lump sum into a pension from the next instalment date. It suits someone who has just retired with PF, gratuity or a maturity amount and needs income now.

A deferred annuity takes the lump sum today and starts the pension after a waiting period. In Plan 758 the wait is 1 to 5 years, and the pension must start by age 80. Two things work in your favour: the rate is locked today, and a longer deferment gives a higher rate. If the annuitant dies during the deferment, the nominee gets the higher of the purchase price plus an accrued additional benefit, or 105% of the purchase price.

	Immediate annuity	Deferred annuity
LIC plans	857, 862, 879	758
Pension starts	Next instalment date	After 1 to 5 years
Rate fixed	On purchase	On purchase
Suits	Retired now, needs income	Retiring within a few years, has a lump sum
Exit	Limited; depends on plan and option	Surrender allowed; guaranteed value 75–90% of the price, less pension paid

Annuity options explained

The option decides how much pension you get and what your family gets afterwards. The more you want left behind, the lower the pension.

Option type	What happens	Jeevan Akshay VII 857	Smart Pension 879	Saral Pension 862
Life annuity	Pension for life, nothing after death	A	A	—
Guaranteed period	Paid for life, at least 5 to 20 years	B to E	B1 to B4	—
Increasing	Pension rises each year (simple)	G (3%)	C1, C2 (3% or 6%)	—
Return of purchase price	Price paid to nominee on death	F	F (D returns the balance)	Option 1
Early return of price	Part or all of price back at 75 or 80	—	E1 to E5	—
Joint life	Pension continues to a second person	H (50%), I (100%)	G1, G2, H1 to I2	—
Joint life + return of price	Price paid after both deaths	J	J	Option 2

New Jeevan Shanti 758 offers single or joint life, and its death benefit already returns at least 105% of the purchase price. Choose carefully: in these plans the option cannot be changed after the policy is issued.

Worked example: ₹10 lakh at age 60

Here is what ₹10 lakh buys at age 60, bought through an agent. Yearly figures marked * are LIC’s own brochure samples; monthly figures are from our calculators.

Plan and option	Yearly pension (yearly mode)	Monthly pension	What the family gets
Jeevan Akshay VII, Option A	₹86,100*	₹6,862	Nothing
Smart Pension, Option A	₹85,000*	₹6,800	Nothing
Smart Pension, Option F	₹64,900*	₹5,192	₹10 lakh
Jeevan Akshay VII, Option F	₹64,000*	₹5,100	₹10 lakh
Saral Pension, single life	₹62,300*	₹4,974	₹10 lakh
Saral Pension, joint life (spouse 55)	₹61,600*	₹4,918	₹10 lakh after both deaths

Keeping the ₹10 lakh for your heirs costs about ₹1,600 to ₹1,900 a month in pension. Neither choice is “right”: it depends on whether you have other assets for your family and whether a spouse depends on your income.

Deferred vs immediate, for a 55-year-old. Suppose Suresh is 55 with ₹10 lakh and plans to retire at 60.

• He buys New Jeevan Shanti 758 now with a 5-year deferment. From 60, our calculator estimates about ₹7,246 a month (₹90,578 a year in yearly mode). If he dies during the deferment, his nominee gets at least ₹10.5 lakh.
• He waits and buys Jeevan Akshay VII Option A at 60. At today’s rates that pays about ₹6,862 a month, with nothing for the family. Rates may be different in five years, and this ignores any interest the ₹10 lakh could earn meanwhile.
• He buys Plan 758 at 59 with a 1-year deferment. Our estimate is about ₹6,488 a month from 60.

These Plan 758 figures are our estimates, built from LIC’s single published sample (age 45, 5-year deferment: ₹86,100 a year). Compare plans for your own age in the LIC pension calculator.

Tip: annuity rates rise with age. Splitting a corpus into two purchases, for example one at 60 and one at 65, can raise total income and keeps some money flexible.

Where New Pension Plus 867 fits

Plan 867 is not an annuity. It is a unit-linked plan for people still earning: premiums go into pension funds, guaranteed additions are credited from year 6, and at vesting you can take up to 60% as a lump sum and use the rest to buy a pension. The fund value depends on markets and is not guaranteed. It suits people with 10 or more years to retirement who accept market risk. Someone who already has the lump sum usually looks at the four annuity plans instead.

How annuity income is taxed

• The pension is taxable. It is added to your total income every year and taxed at your slab rate, in both the old and new regimes. It is not salary, so the standard deduction for salaried pensioners generally does not apply to it.
• Purchase price deduction. The purchase price may be claimed under Section 123 of the Income-tax Act, 2025 (earlier Section 80CCC) in the old regime, within the overall ₹1.5 lakh limit. The new regime gives no such deduction.
• Return of purchase price. The amount paid to the nominee under return-of-price options is generally not taxed as income.
• New Pension Plus 867. Premiums may qualify under Section 123 (earlier 80CCC) in the old regime. The pension is taxable; check the treatment of the lump sum under the rules in force at vesting.
• GST. Nil on the purchase price from 22 September 2025; earlier, single-premium annuities carried 1.8%.

Because a fixed pension is fully taxable, a retiree in a higher tax bracket keeps noticeably less than the headline rate. Compare the post-tax figure with other retirement options before you commit. Tax rules change, so confirm your own case with a tax adviser.

Which LIC pension plan fits which goal

• Highest income from today, other assets for heirs: Jeevan Akshay VII Option A or Smart Pension Option A.
• Income now, capital back to children: Saral Pension 862, or Option F in Jeevan Akshay VII or Smart Pension. At 60 these pay within a few hundred rupees a month of each other.
• A spouse who depends on you: a joint life option, at 50% or 100% to the survivor.
• Worried about inflation: the increasing options in Smart Pension or Jeevan Akshay VII. They start lower but rise every year.
• Retiring in one to five years: New Jeevan Shanti 758 locks today’s rate and pays more for each extra year of deferment.
• Still building the corpus: New Pension Plus 867, if you accept market risk.

Mistakes to avoid

• Putting the whole corpus into one annuity. It is hard to exit, and the income does not rise with prices unless you pick an increasing option. Keep an emergency fund.
• Comparing only the pension amount. Check what the family gets and whether a spouse is covered.
• Ignoring tax. A pension at your slab rate can be worth less than it looks.
• Assuming today’s rates will last. LIC revises annuity rates; get a fresh quote.

Key takeaways

• LIC sells three immediate annuities (857, 862, 879), one deferred annuity (758) and one unit-linked pension plan (867) as on 30 September 2026.
• Immediate annuities pay from the next instalment; Plan 758 starts after 1 to 5 years at a rate locked today.
• On ₹10 lakh at 60, a life annuity pays about ₹85,000 to ₹86,100 a year; return-of-price options pay about ₹62,300 to ₹64,900.
• The annuity option decides both your income and what your family gets; it cannot be changed later.
• The pension is taxable at your slab rate; no GST applies from 22 September 2025.
• For a wider view of LIC plans by goal, see our best LIC plans guide.