Pradhan Mantri Vaya Vandana Yojana
The Central Government of India has announced that a new pension scheme named PMVVY (Pradhan Mantri Vaya Vandana Yojana) would be launched in budget 2017-18 for Senior Citizens with a guaranteed rate of return.
What is Pradhan Mantri Vaya Vandana Yojana
The Pradhan Mantri Vaya Vandana Yojana is similar to Varishtha Pension Bima Yojana (2014) Scheme which was launched during 2014-15.
This scheme is announced for Indian Citizens aged 55 years and above. This scheme was firstly introduced in the Union Budget 2003-04 (Atal Vajpayee Ji’s tenure). A One-time premium payment of Rs 2.66 Lakh would give a lifelong monthly pension of Rs 2, 000 and the assured return was 9% p.a.
Varishtha Pension Bima Yojana (VPBY) was re-launched during 2014-15 and Indian Citizens aged 60 years and above were eligible to avail the benefits of the scheme. Under this scheme, one-time premium payment of Rs 6,66,665/- gives a lifelong monthly pension of Rs 5000 (maximum).
The Central Government has launched a similar scheme named ‘Pradhan Mantri Vaya Vandana Yojana’ (PMVVY). Like VPBY, PMVVY is also a Pension scheme for Senior citizens who are above 60 years of age. The assured return on PMVVY would be 8%.
Features of the Pension Scheme
- Indian Citizens aged 60 years and above are eligible to invest in PMVVY.
- The plan is open for subscription from 04-May-2017 to 03-May-2018.
- One time premium payment of around Rs 1,44,578/- fetches a monthly pension of Rs 1,000 for 10 years.
- One time premium payment of Rs 7,22,892/- would give a monthly pension of Rs 5000 (maximum).
Premium & Pension Details
Govt new Pension scheme for Senior citizens retirees 2017 2018 PMVBY Premium Pension Calculation chart
- The ceiling of maximum pension is for a family as a whole i.e. total amount of pension under all the PMVVY policies issued to a family under this plan shall not exceed the maximum pension limit. The family for this purpose will comprise of the pensioner, his/her spouse and dependents.
- The policy term is for 10 years.
- The policyholder can opt for monthly, quarterly, half yearly or yearly pension payment.
- The assured return is 8% p.a. Effective annually yield works out to 8.30% for a monthly pension.
- In the event of unfortunate demise of the pensioner (policyholder), the premiums paid (purchase price) will be returned to the nominee/legal heir of the pensioner.
- The pension income is taxable in the hands of the pensioner. The tax rate depends on his/her income tax slab.
- Life insurance Corporation (LIC) will be the exclusive administrator for PMVVY scheme.
- Loan up to 75% of purchase price is available after completion of minimum 3 policy years. Interest on the loan will be recovered from your pension amount.
PMVVY Pension Policy can be surrendered during the policy term under exceptional circumstances like pensioner requires money for treatment of any critical/terminal illness of self or spouse. The Surrender value payable will be 98% of purchase price.
- Pension Payment will be through ECS or NEFT.
I believe that income tax benefits are not available on the Purchase price (premium contribution) of PMVVY under Section 80C. Also, the pension amount is a taxable income in the hands of pensioners.
- This scheme has been added to the ‘service tax’ exemption list.
LIC’s 8% Return Pension plan PMVVY & Benefits
Benefits of the Scheme
Pensioner will get the pension during the policy term, pension in arrears (at the end of each period as per mode is chosen by you) will be payable. For example: If you opt for monthly pension mode then after one month of policy date you will start receiving the pension amount.
On the death of the pensioner during the policy term (10 years), the Purchase Price will be refunded to the nominee (or legal heirs in absence of nominee).
On survival of pensioner to the end of the policy term, Purchase Price and final installment of the pension will be paid to the pensioner.