Multiple choice

All of the following can be inferred from the given passage, EXCEPT

Passage:
The pension regulatory authority of India has come out with a new proposal that could lead to an increase in the annuity for the existing as well as new investors in the various pension plans. As per the conditions laid out in a new code of conduct for the annuity providers, the offer document has to include quotations of the range in which the annuity is currently being provided in the market by all the pension funds service providers. Once the potential buyers know the annuity yield spread, they would be motivated to shop around for the best plans available. Another step in this direction is to make it mandatory for the annuity providers to daily publish, both on their website and in at least one leading newspaper, their annual yield for a policy that is ten year old, and has a corpus of a hundred thousand rupees. This will allow the policy holders to compare yields across the spectrum of policy providers.
The devil in the detail stems from the fact that pension eligibility does not work on the same line as the sum assured for life insurance purposes. Many people, particularly those with chronic and lifestyle disease/s, and a high-risk lifestyle, have lesser life expectancy than people with otherwise healthy lifestyles. However, fewer than five percent of customers who bought pension plans more than a decade ago, and are eligible for higher payments, actually get them. An opinion that is increasingly being echoed in the consumer protection communities is that all customers should be allowed to ‘port’, i.e. transfer their policies to other service providers, if they desire so. The law can be enacted, but for the benefits to accrue, not only do the customers need to be more aware, but also, the regulators need to do more to force customers to have a hard look at their retirement kitties.

  1. Regulatory bodies have been found wanting in protecting consumer interests.

  2. Health conscious individuals end up with a smaller corpus of pension savings.

  3. The pension annuity provider companies only sometimes follow fair trade practices.

  4. Buyer beware principle applies in buying pension policies.

  5. The new code of conduct is aimed at removing blind corners in the system.

Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

(1) Can be inferred. The fact that customers who bought policies more than five years ago are not getting the best possible yields points towards this.

(2) Correct. It is actually the people who have lower life expectancy that are entitled to higher annuity and end up with smaller corpus.
(3) Can be inferred. The fact that only recent buyers have got the best possible returns from their pension plans proves that companies do try and get away with paying lower than eligible annuity yields.
(4) Can be inferred. Because so many pension policy holders are not getting the best possible return on their investment proves that the buyer needs to read between the lines.
(5) Can be inferred. The systemic overhaul is aimed at bringing more transparency in the system.