Senior Citizen Pension Scheme: Things to know about Pradhan Mantri Vaya Vandana Yojana

Pension Schemes: Influenced by the success and popularity of Varishtha Pension Bima Yojana 2003 and Varishtha Pension Bima Yojana 2014 schemes and to protect elderly people aged 60 years and above in the falling interest regime, the Modi government had announced the launch of a simplified scheme of assured pension, called Pradhan Mantri Vaya Vandana Yojana (PMVVY). The scheme is currently being implemented through the Life Insurance Corporation (LIC) of India and was formally launched by Arun Jaitley in New Delhi.

As per the scheme, on payment of an initial lump sum amount ranging from a minimum purchase price of Rs 1,50,000 for a minimum pension of Rs 1000 per month to a maximum purchase price of Rs 7,50,000 for a maximum pension of Rs 5,000 per month, subscribers will get an assured pension based on a guaranteed rate of return of 8% per annum, payable monthly.

Pension Scheme: Pradhan Mantri Vaya Vandana Yojana – Things to Know

• The Pradhan Mantri Vaya Vandana Yojana is a Pension Scheme announced by the Government of India exclusively for senior citizens. 
• 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.
  

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Eligibility Conditions and Other Restrictions:

• • Minimum Entry Age: 60 years (completed)
  • Maximum Entry Age: No limit
  • Policy Term: 10 years
  • Minimum Pension: Rs 1,000 per month
    • Rs 3,000 per quarter
    • Rs 6,000 per half-year
    • Rs 12,000 per annum

• Maximum Pension: Rs 5,000 per month
  • Rs 15,000 per quarter
  • Rs 30,000 per half-year
  • Rs 60,000 per annum

Payment of Purchase Price:

The scheme can be purchased by payment of a lump-sum purchase price. The pensioner has an option to choose either the amount of pension or the purchase price.

The minimum and maximum purchase price under different modes of pension will be as under: