Pursuant to Finance Ministry modified the PM Vaya Vandana Yojana (PMVVY) pension scheme for senior citizens, Life Insurance Corporation of India (LIC) has launched the non-linked, non-participating, pension plan subsidized by the Centre. The scheme will provide an assured rate of return of 7.40% per annum. This plan will be available for sale commencing from Tuesday for three financial years i.e. Open from May 26, 2020, up till March 31, 2023, with an assured interest rate of 7.40% p.a. for FY 2020-21. For policies sold during the next two financial years (i.e.2021-22 & 2022-23), the applicable assured rate of interest will be reviewed and decided at the beginning of each financial year by the government. LIC of India has been mandated to operate the scheme. According to a statement issued by LIC of India the scheme can be purchased offline as well as online from the LIC website.
There is a minimum and maximum limit for investment. The minimum investment for monthly pension is Rs.162162 and maximum investment for monthly pension is Rs.1500000. The investment can be made by making a one-time purchase or in parts. The ceiling of minimum or maximum amount varies according to the pension payment mode chosen as per the below table. (Important: once any option is chosen, it cannot be changed later)
Monthly pension scheme:
| Maximum purchase | Maximum pension | Minimum purchase | Minimum Pension |
| Rs.1500000 | Rs.9250 | 162162 | Rs.1000 |
Quarterly pension payment scheme:
| Maximum purchase | Maximum pension | Minimum purchase | Minimum Pension |
| Rs.1489933 | Rs.27750 | 161074 | Rs.3000 |
Half yearly pension payment scheme:
| Maximum purchase | Maximum pension | Minimum purchase | Minimum Pension |
| Rs.1476064 | Rs.55500 | Rs.159574 | Rs.6000 |
Yearly pension payment scheme:
| Maximum purchase | Maximum pension | Minimum purchase | Minimum Pension |
| Rs.1449086 | Rs.111000 | 156658 | Rs.12000 |
- Payment processed through NEFT/ Aadhar enabled payment system.
- On completion of the policy term of 10 years, the pensioner (investor) will be refunded the purchase price (amount invested to earn pension) along with the final installment. In case of the death of the pensioner during the policy term of 10 years, the purchase price will be paid to the nominee.
- Loan up to 75 percent of the purchase price can be availed after 3 years of the date of policy purchased. Interest will be recovered from pension installment and the loan amount will be recovered from purchase price payable to pensioner at the end of 10 years term or from the settlement of death claim as the case may be.
- In case of emergencies like treatment of any critical/ terminal illness of self or spouse, pre-mature closure of the investment is allowed. However, 2% of penal charges will be levied on premature withdrawal and 98 percent of the purchase price will be returned.
- The interest earned from the above scheme is taxable as per income tax slabs.
- The scheme is exempted from goods and services tax (GST).
- On the death of the Pensioner during the policy term of 10 years, the Purchase Price shall be refunded to the beneficiary.
- Suicide: There shall be no exclusion on a count of suicide and full Purchase Price shall be payable
The PMVVY scheme is expected to provide a steady regular source of income to a large section of the senior citizen population at a time of falling interest rates.
Source: LIC website
