Redeem Max Life Smart Invest Pension Super? | Value Research If you surrender your pension plan before maturity, the surrender value will be treated as income and taxed at applicable slab rate
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Redeem Max Life Smart Invest Pension Super?

If you surrender your pension plan before maturity, the surrender value will be treated as income and taxed at applicable slab rate

I transferred my pension corpus from the UK to Max Life Smart Invest Pension Super (Regular Plan) in 2010. I am not very happy with the performance of this fund in the last five years, as it has appreciated only around 50% while the stock market has appreciated much more. My question is will there be any IT / capital gain liabilities if i take out the corpus and invest in a normal mutual fund or can I transfer it to another pension provider? If so, then what would you recommend?
- Dr.S.Gollamudi

Max Life Smart Invest Pension Super is a unit linked policy with heavy charges during initial years. High expenses is the reason of your policy's bad performance. Your policy has completed 5 years. If you surrender now,you may do so without paying any surrender charges.

Taxation
If you surrender your pension plan before maturity, the surrender value received will be treated as your income and taxed at applicable slab rate. Also, you will have to pay back the tax exemptions you had availed on the premiums paid. Apart from this, two third of the surrender value must be used to purchase an annuity plan.

Solution
There is no easy way out. If you stay invested without paying premiums, the company will pay you the surrender value on completion of the revival period. If you surrender now, you will be required to pay tax on surrender value and buy an annuity for 2/3rd corpus.

We suggest you to surrender it, pay taxes as applicable and limit your losses. You may then invest the value received in mutual funds as per your goals.


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