Government of India launched Pradhan Mantri Vaya Vandana Yojana (PMVVY) to protect the interest income of senior citizens (aged 60 years & above) against interest rate fluctuation. This social security pension scheme aims to provide assured return to the elderly citizens of India. Scheme was introduced initially for period between May-2017 to Mar-2020 and has been further extended till March-2022. Key features of the scheme are as below:
- Any senior citizen aged 60 & above can join the scheme. No upper age limits.
- Scheme is offered/ distributed via Life Insurance Corporation of India (LIC). It can be purchased online or offline or via agents.
- Policy Investment Tenure is for 10 years. Like other insurance plans, this scheme also allows free look period and customer can opt out if they are not happy with the policy terms/features.
- Scheme allows only lump sum investment. Per person minimum purchase is of Rs. 1,62,162/- for minimum pension of Rs. 1,000/- per month & maximum purchase is of Rs. 15,00,000/- for pension of Rs. 9,250/- per month.
- Customer can select either for monthly or quarterly or half-yearly or annual pension. Pension will be directly paid to the linked bank account.
- Pension amount can be
- Monthly between Rs. 1,000/- to Rs. 9,250/-
- Quarterly between Rs. 3,000/- to Rs. 27,750/-
- Half-yearly between Rs. 6,000/- to Rs. 55,500/-
- Annually between Rs. 12,000/- to Rs. 1,11,000/-
- If policy holder survives till maturity of policy, he/she will get back the purchase price of the policy.
- In case of death of policy holder before maturity, the purchase price will be paid to the nominee/ family. For suicide cases also, the full purchase price will be paid and there will be no deductions.
- Premature withdrawal before policy maturity is permitted only for medical treatment of self and spouse. In such cases surrender value will be 98% of purchase price.
- Loan facility available after completion of 3 years. Maximum 75% of purchase price can be availed as loan to meet any requirements of funds. Loan interest will be debited from pension amount and principal will be debited from maturity value.
- PMVVY provides assured pension of 7.40% p.a. payable monthly for FY 2021-22. This assured rate of pension shall be payable for the full policy term of 10 years for all the policies purchased till 31st March, 2022. In case the scheme/fund generates lesser interest than the guaranteed rate, Government of India will subsidize the shortfall of interest to LIC. Being assured pension scheme for senior citizens, PMVVY is exempted from GST to keep the cost of expenses on lower side.