If you are a senior citizen and looking for regular income at higher rates on your retirement savings, then you have time till March 31, 2020, to avail the benefit of the Pradhan Mantri Vaya Vandana Yojana (PMVVY) pension scheme, which offers up to 8.5% return.

Currently, the Government has not extended the last date to avail this scheme beyond March 31, 2020. So, if you are a senior citizen and have lump sum money in your bank account, then you can consider buying this immediate annuity scheme before March 31.

This immediate annuity LIC pension scheme can provide senior citizens with a steady income after retirement. Citizens above 60 years of age can invest in this scheme which offers a guaranteed monthly income of up to Rs 10,000 for 10 years. Apart from this, it also offers a death benefit in the form of return of purchase price of the scheme to the nominee.

The PMVVY scheme offers assured pension to senior citizens (above 60) for 10 years. If the pensioner survives till the end of the policy term, the principal investment is returned to him. If he dies during the term, the amount is given to his nominee.

An immediate annuity scheme is a contract under which an insurer agrees to give the purchaser i.e. the pensioner a fixed amount of money per month or as per a pre-set frequency, starting immediately after purchase of the pension plan scheme. Here are some important details of the scheme:

Eligibility criteria and other conditions:

  • Minimum entry age: 60 years (completed)
  • Maximum entry age: No limit
  • Policy term: 10 years
  • Minimum pension: Rs 1000 per month
  • Maximum pension: Rs 10000 per month. The total amount of pension allowed per senior citizen should not exceed the maximum pension limit.

How to buy PMVVY pension scheme

You can buy PMVVY pension scheme from Life Insurance Corporation of India (LIC) of India. You can purchase the scheme either offline or online. If you want to purchase it offline, you must visit the nearest LIC office. However, if you want to purchase the annuity scheme online, log on to the website of LIC – www.licindia.in.

PMVVY scheme can be bought from state-owned life insurance behemoth LIC in both offline and online mode.

If you invest Rs 10 lakh in the scheme, you can get a pension of Rs 6,666 per month for 10 years. If you opt for the quarterly pension payment mode, then you will get Rs 20,125 pension every quarter. In half-yearly and annual options, you will get Rs 40,650 and Rs 83,000 pension respectively.

Other than offering higher assured returns, the PMVVY offers ample liquidity to the policyholder. You can avail loan facility after completing three policy years. The maximum loan that can be granted will be 75% of the annuity purchase price. The rate of interest to be charged for the loan amount is determined at periodic intervals.

In case an investor wants to exit the scheme before the end of the policy term, he can do so only in special situations. The scheme allows premature exits if the pensioner requires money for the treatment of a critical/terminal illness of self or spouse. In such a case, the surrender value is 98% of the annuity purchase price.

Taxation

Investment in PM Vaya Vandana Yojana does not qualify for tax deduction under Section 80C. Pension received from the scheme is also taxable. However, GST will not be applicable on the annuity investment amount.