The Finance Minister of India Mr.Arun Jaitley formally launched Senior Citizen Pension Scheme called Pradhan Mantri Vaya Vandana Yojana (PMVVY) on July 21, 2017. LIC of India has been mandated to operate the scheme. LIC of India opened the scheme on May 4, 2017 which will remain open for a period of one year from the date of opening the scheme. Senior citizens of 60 years and above are eligible to invest in the scheme. Investment in the scheme can be made to either through LIC online or off-line.
Highlights of the scheme:
- The scheme offers an assured return (Pension) of 8% payable monthly for 10 years (equivalent to 8.30 per cent per annum).
- There is a minimum and maximum limit for investment. The investment can be made by making one time purchase or in parts. The ceiling of minimum or maximum amount varies according to the pension payment mode chosen as per below table.
|Mode of Pension||For Monthly Pension scheme||For Quarterly Pension scheme||For Half-yearly Pension scheme||For Yearly Pension scheme|
- On completion of policy term of 10 years, the pensioner (investor) will be refunded the purchase price (amount invested to earn pension) along with the final installment. In case of the death of the pensioner during the policy term of 10 years, the purchase price will be paid to the nominee.
- Loan up to 75 per cent of purchase price can be availed after 3 years of date of policy purchased. Interest will be recovered from pension installment and loan amount will be recovered from purchase price payable to pensioner at the end of 10 years term or from the settlement of death claim as the case may be.
- In case of emergencies like treatment of any critical/ terminal illness of self or spouse, pre-mature closure of the investment is allowed. However 2% penal charges will be levied on premature withdrawal and 98 per cent of the purchase price will be returned.
- The interest earned from the above scheme is taxable as per income tax slabs.
- The scheme is exempted from goods and services tax (GST).
The PMVVY scheme is expected to provide steady regular source of income to large section of senior citizen population at a time of falling interest rates.