All About Pradhan Mantri Vaya Vandana Yojana (PMVVY)
By Anupama Deshpande | June 06, 2018
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Pradhan Mantri Vaya Vandana Yojana (PMVVY) provides immediate pension for senior citizens of 60 years and above. This scheme protects the elderly senior citizens against a future fall in their interest income due to uncertain market conditions by offering guaranteed returns. The subscription in this scheme has started from May 4, 2017.
Snapshot of Pradhan Mantri Vaya Vandana Yojana (PMVVY) : Guaranteed Pension Scheme
| Point | Description |
|---|---|
| Scheme Name | Pradhan Mantri Vaya Vandana Yojana (PMVVY) |
| Eligibility | 60 years of age and above |
| Mode of Investment | Single Lump Sum Investment |
| Minimum Amount | Rs. 1,50,000 |
| Maximum Amount | Rs. 15,00,000 |
| Interest Rate Offered | 8% p.a. Payable Monthly |
| Mode of payment of pension | Monthly, Quarterly, Half-Yearly or Yearly |
| Tenure of the Scheme | 10 Years |
| Returns | Guaranteed Returns |
| How to subscribe? | It can be subscribed offline or online through LIC |
| Useful for | Senior citizens who need regular income & are in lower tax brackets |
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Benefits of Pradhan Mantri Vaya Vandana Yojana (PMVVY)
- It is a government backed pension scheme
- It is a social security initiatives for senior citizens
- Scheme is run by Life Insurance Corporation of India (LIC), the most trusted Insurance Company in India
- Returns are assured and guaranteed
- Interest rate is 8% p.a. Payable Monthly, which is equivalent to 8.30% p.a.
- Senior citizens can ear a monthly pension of Rs. 10,000 with the help of this scheme
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Pradhan Mantri Vaya Vandana Yojana (PMVVY) offers Guaranteed Returns
In case the returns generated by LIC are less than 8% then the differential return, which is the difference between the return generated by LIC and the assured return of 8% p.a. would be borne by the government as subsidy on an annual basis.
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Extension of Investment Limit & last date for subscription under Pradhan Mantri Vaya Vandana Yojana (PMVVY)
The Union Cabinet, chaired by Prime Minister Narendra Modi, approved the extension of the investment limit from Rs 7.5 lakhs to Rs 15 lakhs (per family) on May 2, 2018.
The last date for subscription to the scheme is also extended till March 31, 2020 which earlier was only till May 4, 2018.
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Loan under Pradhan Mantri Vaya Vandana Yojana (PMVVY)
Loan upto 75% of purchase price is allowed after completion of 3 policy years
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.
Interest on loan will be deducted from the pension and interest amount will vary according to mode of pension i.e. Monthly, Quarterly, Half-Yearly or Yearly. The loan outstanding shall be recovered from the claim proceeds at the time of exit.
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Drawbacks of Pradhan Mantri Vaya Vandana Yojana (PMVVY)
- Scheme is not offered to the persons below 60 years of age
- Maximum tenure of the scheme is only of 10 years
- The scheme does not offer liquidity
- There is maximum cap on investment amount i.e. maximum Rs. 15 lakhs only can be invested
- The interest rate offered is much lower as compared to inflation
- Income tax benefit is not available against investment amount under this scheme
- Maximum monthly pension is also very less i.e. Rs. 10,000 p.m.
- Surrender of the scheme is possible only for exceptional cases
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Maturity of Pradhan Mantri Vaya Vandana Yojana (PMVVY)
If the pensioner is alive at the time of maturity then the entire policy purchased price will be paid to him/ her along with the last pension instalment.
In case the pensioner expires before maturity then the entire purchase price will be refunded to the beneficiary i.e. legal heir or nominee.
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Anupama is a Co-Founder of CodeForBanks.com. She is an MBA (Finance) and Chartered Financial Analyst (CFA). She also carries a Fellowship degree in Life Insurance Sector and is a Master of Computer Application (MCA). She is an expert in Finance Field with an experience of over 18 years on different managerial positions in finance industry including Stock Market, Depository and Mutual Fund Sectors. Apart from that she has remained for few years in the field of marketing as well. Her suggestions and advice for investments have been very useful to many people.Her vast interest & expertise in the field of finance have encouraged her to write the articles so that others can also get benefitted out of them. She never loses any opportunity to learn and be creative. She is a valuable asset for CodeForBanks.com & important resource to all those around her.