Pradhan Mantri Vaya Vandana Yojana (PMVVY) is a Pension Scheme announced by the Government of India exclusively for senior citizens aged 60 years and above from 31st March 2020.
About PMVVY
- It is a Pension Scheme exclusively for senior citizens aged 60 years and above.
- The Scheme can be purchased offline and online through the Life Insurance Corporation (LIC) of India which has been given the sole privilege to operate this Scheme.
Maximum Investment
One can invest a maximum amount of ₹15 lakh under the Pradhan Mantri Vaya Vandana Yojana (PMVVY) scheme. The tenure of the policy is set at 10 years.
Key Features of the Scheme
- The scheme provides initially an assured rate of return of 7.40 % per annum for the year 2020-21 per annum and thereafter to be reset every year.
- Pension is payable at the end of each period, during the policy term of 10 years, as per the frequency of monthly/ quarterly/ half-yearly/ yearly as chosen by the pensioner at the time of purchase.
- The scheme is exempted from GST.
- On survival of the pensioner to the end of the policy term of 10 years, the Purchase price along with the final pension installment shall be payable.
- Loan up to 75% of Purchase Price shall be allowed after 3 policy years (to meet the liquidity needs).
- Loan interest shall be recovered from the pension installments and the loan is to be recovered from claim proceeds.
- The scheme also allows for premature exit for the treatment of any critical/ terminal illness of self or spouse.
- On such premature exit, 98% of the Purchase Price shall be refunded.
- On the death of the pensioner during the policy term of 10 years, the Purchase Price shall be paid to the beneficiary.
Benefits of the Scheme
The following are the major benefits of the Pradhan Mantri Vaya Vandana Yojana (PMVVY):
- The ceiling of maximum pension is for a family as a whole, the family will comprise of pensioner, his/her spouse, and dependants.
- The shortfall owing to the difference between the interest guaranteed and the actual interest earned and the expenses relating to administration shall be subsidized by the Government of India and reimbursed to the Corporation.
Eligibility Conditions and Other Restrictions
- Minimum Entry Age: 60 years (completed)
- Maximum Entry Age: No limit
- Policy Term: 10 years
- Investment limit: Rs 15 lakh per senior citizen
- Minimum Pension:
- Rs. 1,000/- per month
- 3,000/- per quarter
- 6,000/- per half-year
- 12,000/- per year. Inve
- Maximum Pension:
- Rs. 12,000/- per month
- 30,000/- per quarter
- 60,000/- per half-year
- 1,20,000/- per year
- The Scheme can be purchased offline as well as online through the Life Insurance Corporation (LIC) of India which has been given the sole privilege to operate this Scheme.
Mode of Pension Payment
- The modes of pension payment are monthly, quarterly, half-yearly & yearly. The pension payment shall be through NEFT or Aadhaar Enabled Payment System.
- The first installment of pension shall be paid after 1 year, 6 months, 3 months, or 1 month from the date of purchase of the same depending on the mode of pension payment i.e. yearly, half-yearly, quarterly, or monthly respectively.
Surrender Value
The scheme allows premature exit during the policy term under exceptional circumstances like the Pensioner requiring money for the treatment of any critical/terminal illness of self or spouse. The Surrender Value payable in such cases shall be 98% of the Purchase Price.
Loan
- A loan facility is available after the completion of 3 policy years.
- The maximum loan that can be granted shall be 75% of the Purchase Price.
- The rate of interest to be charged for the loan amount shall be determined at periodic intervals.
- For the loan sanctioned in the Financial Year 2016-17, the applicable interest rate is 10% p.a. payable half-yearly for the entire term of the loan.
- Loan interest will be recovered from the pension amount payable under the policy.
- The Loan interest will accrue as per the frequency of pension payment under the policy and it will be due on the due date of pension.
- However, the loan outstanding shall be recovered from the claim proceeds at the time of exit.
Free Look period
- If a policyholder is not satisfied with the “Terms and Conditions” of the policy, he/she may return the policy to the Corporation within 15 days (30 days if this policy is purchased online) from the date of receipt of the policy stating the reason for objections.
- The amount to be refunded within the free look period shall be the Purchase Price deposited by the policyholder after deducting the charges for Stamp duty and pension paid, if any.
Exclusion
Suicide
There shall be no exclusion on the count of suicide and the full Purchase Price shall be payable
Status
The Union Cabinet has given its approval to the Extension of Pradhan Mantri Vaya Vandana Yojana (PMVVY) and other changes for the welfare of and to enable old age income security for Senior Citizens.
Changes to the Welfare of the Aged
- Extension of Pradhan Mantri Vaya Vandana Yojana (PMVVY) up to 31st March, 2023.
- Revised rate of returns of Senior Citizens Saving Scheme (SCSS).
- Approval for expenditure to be incurred on account of the difference between the market rate of return generated by LIC.
The minimum investment has also been revised to Rs.1,56,658 for a pension of Rs.12,000/- per annum and Rs.1,62,162/- for getting a minimum pension amount of Rs.1000/- per month under the scheme.
