PMVVY – Pension scheme Launched for senior citizen with 8% rebate Pradhan Mantri Vaya Vandhan Yojana (PMVVY) was earlier announced by PM Narender Modi and this much-awaited scheme finally came into being on 21st July 2017.
The Government launched this new pension scheme exclusively for the senior citizens in the 2017-18 Union Budget. Under which the policy will provide a guaranteed return of 8% for 10 years. Finance Minister Arun Jaitley said PMVVY will provide a respectable rate of return to senior citizens at a time when interest rates will fall globally.
— Ministry of Finance (@FinMinIndia) July 21, 2017
Highlights of the PMVVY scheme
- The scheme is available exclusively for the senior citizens aged 60 years and above which is available from May 4, 2017, to May 3, 2018.
- The scheme assures pension based on a guaranteed return of 8% which is equivalent to 8.30% per annum for 10 years with an option to opt for the pension on a monthly/quarterly/half-yearly or on annual basis.
- Through Life Insurance Corporation (LIC) the scheme can be purchased online as well as offline in the current financial year.
- The pension shall be through National Electronic Funds Transfer (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.
- As a part of the plan, the scheme can be purchased by making a one-time payment.
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 and 30 days if this policy is purchased online from the date of receipt of the policy with valid reason.
- This scheme is flexible as the subscribers can loan up to 75% of the purchase price after 3 years of the policy. Loan interest shall be recovered from the pension installments and the loan to be recovered from loan proceeds.
- PMVVY is also exempted from service tax or GST.
- One can also exit from the scheme in a premature state with a valid reason of terminal illness of the pensioner or the spouse. In that case, 98% of the purchase price will be refunded.
Investment Scheme of PMVVY
There is a minimum and maximum limit for investment under PMVVY. The amount varies according to the pension payment mode chosen.
- The return guaranteed and the actual interest earned shall be subsidized by the Centre and reimbursed to LIC.
- Under the scheme, if the pensioner lives till the end of the policy term of 10 years, he/she will be paid the purchase price along with the final pension installment.
- In the case of the death of the pensioner during the policy term, the purchase price will be paid to the beneficiary.
As the senior citizens want no risk investment and they want a non- fluctuating and reasonable rate of return because they have not gainfully employed at the age, this scheme is beneficial to them.
This scheme takes the Government one step closer to provide social security to its citizens.