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Pradhan Mantri Vaya Vandana Yojana (PMVVY) is a subsidized pension scheme categorically introduced for senior citizens above the age of 60. It is a government backed pension scheme that provides an alternate source of pension planning to the elderly. It is exclusively available through the LIC of India. You can contact any LIC agent to subscribe to this policy or log on to their website to purchase this policy.
The PMVVY Policy is unique in that; it offers assured returns on your investment. The returns are paid in the form of fixed pension at regular intervals as chosen by the policyholder. The policy also comes with a maturity benefit and death benefit giving additional assurances to the family of the pensioner.
It was initially announced from 4th May, 2017 to 31st March, 2020. It was recently extended up to 31st March 2023, for a further period of three years beyond 31st March, 2020.
About PMVVY – Pradhan Mantri Vaya Vandana Yojana
PMVVY is open only to people who are 60 years of age or older. The PMVVY is a pension fund for senior citizens with fixed dividends on a monthly, quarterly, half-yearly or annual basis for a term of 10 years. As an investor, you can choose your investment either on the pension amount you want to receive or the purchase price you are able to invest in PMVVY.
The cumulative investment that can be made in PMVVY is limited to Rs. 15 lakhs per senior citizen and the maximum monthly pension for PMVVY is Rs. 9250 per senior citizen. Thus, if both partners are over 60 years of age, the maximum monthly pension could be Rs. 18,500 with a family contribution of Rs. 30 lakhs. The pension in the PMVVY does not depend on the age of the investor.
The updated PMVVY would have a lower investment interest rate than before. Unlike in the older version of PMVVY, the interest rate in the modified PMVVY will fluctuate depending on the financial year (FY) in which the investment is made.
The scheme is valid for 10 years and for investments made in the fiscal year 20-21 to 31st March 2021, the government has declared the interest rate to be payable at 7.4% per month i.e. 7.66% per year for a period of 10 years. For investments made in the next two fiscal years, i.e. 2021-22 and 2022-23, the Government will announce the interest rate of the PMVVY at the beginning of each fiscal year.
Senior citizens can enrol for this policy either online or offline. As mentioned earlier, the policy is available only with LIC. So here are the steps to enrol for the PMVVY Policy:
Here are the eligibility criteria to apply for Pradhan Mantri Vaya Vandana Yojana (PMVVY):
Here are the documents required to enrol for PMVVY:
Rs. 1,000 per month
Rs 9,250 per month
Rs. 3,000 per quarter
Rs. 27,750 per quarter
Rs. 6,000 per half-year
Rs. 55,500 per half-year
Rs. 12,000 per year
Rs. 1,11,000 per year
Pension payout options can be monthly, quarterly, half-yearly or annual. The first instalment of the pension shall be received after 1 year, 6 months, 3 months or 1 month from the date of purchase of the same, based on the mode of payment you have chosen, i.e. annual, half-yearly, quarterly or monthly.
No Suicide Exclusion: There is no deduction on the count of suicide and the full purchase price is payable.
1. Who is the administrator of the PMVVY?
On behalf of the Government of India, Life Insurance Corporation of India is to be the PMVVY administrator.
2. What is the term of this scheme? Is there any upper limit on age for purchasing this scheme?
The scheme is valid for a term of 10 years. There is no upper age limit to purchase this policy.
3. Will the insurance rate agreement for the whole ten-year policy period be the same when it is acquired, or will the interest rate payable to the policy at the time of purchase change for the policyholder annually?
The contract rate will remain the same for the whole ten years of the policy as was the rate on the fiscal year the policy is bought. This is the policy interest rate acquired during F.Y. Return of 7.40% p.a. will be guaranteed in 2020-21. For a full 10-year period, payable on a monthly basis (equivalent to 7.66% p.a.). The applicable guaranteed rate of interest at which the pension payment is made, is reviewed and determined by Ministry of Finance, Government of India at the beginning of the fiscal year for the policies sold in the next two financial years i.e. Financial Year 2021-22 and 2022-2023. Once the interest rate on policies acquired in that financial year is however fixed, it will remain constant for a complete 10-year cycle.
4. How is this scheme different from the earlier versions of Pradhan Mantri Vaya Vandana Yojana?
The guaranteed pension rates for policies purchased for the year are reviewed by the Ministry of Finance of the Government of India, and are determined at the start of each year. The plan shall have an assured pension of 7.40% p.a. for the first financial year, i.e. up until 31 March 2021 that was payable monthly. The guaranteed amount of pension was 8.00% p.a. in the earlier edition of PMVVY that was payable monthly.
5. Will the overall purchase price under this scheme have any restrictions?
Complete purchase price under all policies under this Scheme and all policies implemented under the previous versions of Pradhan Mantri Vaya Vandana Yojana given to a senior citizen shall not exceed Rs. 15 lakhs.
6. Is it possible to surrender the policy adopted in this scheme? What are the terms of surrender under this scheme?
The policy enforced under this scheme could be surrendered at any point within the policy period. They can surrender it under extraordinary situations, such as a pensioner needing money or to treat any ill health of themselves or their spouse.
7. Can one avail a loan under the scheme? What is the rate of interest on such loans availed under this scheme?
One can apply for a loan upon completion of three policy years. The highest loan that can be approved is 75% of the purchasing amount. The interest rate to be paid for the amount of the loan shall be set at periodic intervals. For the loan approved before 30 April 2021, the interest rate payable to the earlier iterations of this arrangement is 9.5% p.a. for the full length of the loan.
8. How is the interest and loan principal restored under this scheme?
Loan principal will be recovered from the balance of the pension payable by the policy. Loan interest will accrue on the basis of the frequency of payment of the pension under the agreement which will be due on the due date of the pension. However, the outstanding debt shall be repaid from the proceeds of the claim at the time of exit.
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