Pradhan Mantri Vaya Vandana Yojana (PMVVY) is a Pension Scheme announced by the Government of India exclusively for the senior citizens aged 60 years and above which is available from 4th May, 2017 to 31st March, 2020.
Benefits of the scheme
Following are the major benefits under the Pradhan Mantri Vaya Vandana Yojana (PMVVY):
Scheme provides an assured return of 8% p.a. payable monthly (equivalent to 8.30% p.a. effective) for 10 years.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 Service Tax/ GST.
On survival of the pensioner to the end of the policy term of 10 years, Purchase price along with final pension installment shall be payable.
Loan upto 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 loan 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 death of the pensioner during the policy term of 10 years, the Purchase Price shall be paid to the beneficiary.
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
Rs. 3,000/- per quarter
Rs.6,000/- per half-year
Rs.12,000/- per year
Maximum Pension: Rs. 10,000/- per month
Rs. 30,000/- per quarter
Rs. 60,000/- per half-year
Rs. 1,20,000/- per year
Ceiling of maximum pension is for a family as a whole i.e. total amount of pension under all the policies allowed to a family under this plan shall not exceed the maximum pension limit. The family for this purpose will comprise of pensioner, his/her spouse and dependants.
The Scheme can be purchased offline as well as online through Life Insurance Corporation (LIC) of India which has been given the sole privilege to operate this Scheme. To buy online, visit http://www.licindia.in/
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:
Mode of PensionMinimum Purchase PriceMaximum Purchase PriceYearlyRs. 1,44,578/-Rs. 7,22,892/-Half-yearlyRs. 1,47,601/-Rs. 7,38,007/-QuarterlyRs. 1,49,068/-Rs. 7,45,342/-MonthlyRs. 1,50,000/-Rs. 7,50,000/-
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 instalment 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 Purchase Purchase Price.
Loan
Loan facility is available after 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 loan amount shall be determined at periodic intervals. For the loan sanctioned in 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 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 of objections.
The amount to be refunded within 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 count of suicide and full Purchase Price shall be payable
Source : LIC
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