Months after Prime Minister Narendra Modi announced a pension scheme exclusively for senior citizens, Finance Minister Arun Jaitley today formally launched the same, titled as Pradhan Mantri Vaya Vandana Yojana (PMVVY). The scheme, which will apply to the senior citizens who are 60 years and above, aims to deliver a guaranteed 8% interest rate for 10 years. If financial experts are to be believed, the pension scheme would provide more opportunities for senior citizens to generate a steady flow of income. The move assumes enormous significance at the face of rapidly falling interest rates. And what’s more the scheme is out of the purview of Goods and Services Tax (GST).
Key Things to Note about Pradhan Mantri Vaya Vandana Yojana (PMVVY)
- You can purchase the scheme either online or offline through Life Insurance Corporation of India (LIC). The country’s largest insurer is given the sole privilege to operate the scheme.
- An assured 8% return (fixed rate) per annum for as much as 10 years
- The pattern of the pension payment is based on the frequency opted by the pensioners while purchasing the policy. The frequency can be monthly, quarterly, half-yearly or annually.
- In the event of the pensioner surviving at the end of 10 years, the total term of the said pension scheme, he/she will receive the purchase price as well as the final pension installment.
- If the pensioner dies during the 10-year term, the concerned beneficiary will receive back the payment of purchase price.
- A provision of premature exit is also available in the case of the treatment of any critical or terminal illness of an individual or the spouse. If the exit does happen, a refund at 98% of the purchase price can be initiated.
- You can also avail a loan after three years of the policy term to meet any liquidity needs that may arise. A loan equivalent to 75% of the purchase price can be availed by a pensioner. The interest payable from your end would be recovered from the pension installments, while the loan would be recovered from the claim proceeds.
What About the Investment Amount?
Based on the chosen frequency, the amount of investment in PMVVY scheme would vary. For a better clarity on the same, you can refer to the table below.
|Mode of Pension||Min. Purchase Price (In₹)||Max. Purchase Price (In₹)||Min. Pension Amount (In₹)||Max. Pension Amount (In₹)|