Know all about Pradhan Mantri Vaya Vandana Yojana

Know all about Pradhan Mantri Vaya Vandana Yojana

There are different types of specialised investment avenues designed for senior citizens. These avenues provide better returns and also give tax benefits to senior citizens. One such senior citizen investment scheme is the Pradhan Mantri Vaya Vandana Yojana which has been launched by the Indian Government. Let’s understand what the scheme is all about and what it offers –

What is Pradhan Mantri Vaya Vandana Yojana?

Pradhan Mantri Vaya Vandana Yojana, also called PMVVY in short, is a senior citizen pension scheme. The scheme was launched in the year 2014 and it is a pilot scheme which is available for a limited time. Interested individuals aged 60 years and above can invest in Pradhan Mantri Vaya Vandana Yojana from 4th May 2017 to 31st March 2020.

Under the scheme, senior citizens can make a lump sum investment and then receive pension income. Pension is paid for ten years which is also the term of the plan.

Features of Pradhan Mantri Vaya Vandana Yojana

The senior citizen pension scheme called PMVVY has the following salient features –

  • The scheme is sold only by the Life Insurance Corporation of India (LIC)
  • If you are aged 60 years and above you can buy the scheme
  • You have to pay a lump sum amount to buy scheme. This amount is called the purchase price
  • The duration of the scheme is 10 years and you get pensions during these 10 years
  • Pensions can be received annually, half-yearly, quarterly or monthly as per your choice
  • The return under the scheme is guaranteed and it is 8% per annum payable monthly. This equals an effective interest rate of 8.30% annually
  • Pension is paid by direct transfer to your bank account through NEFT or through Aadhar Card linked payment system called AEPS
  • No GST is applicable to the investments did into the senior citizen pension scheme

Eligibility criteria for PMVVY

The following eligibility criteria would have to be fulfilled for investing in this senior citizen pension scheme –

  • You should be aged 60 years and above. However, there is no maximum age limit. You can invest at any age provided you are a senior citizen
  • The amount of pension is guaranteed and the minimum and maximum limit depends on the pension payment mode. They are as follows –
  • Pension payment modeMinimum pensionMaximum pension
    MonthlyINR 1000INR 10,000
    QuarterlyINR 3000INR 30,000
    Half-yearlyINR 6000INR 60,000
    AnnuallyINR 12,000INR 120,000
  • The minimum and maximum investment amount depending on the pension payment mode that you select. The amounts are as follows –
  • Pension payment modeMinimum investment requiredMaximum investment allowed
    MonthlyINR 150,000INR 15,00,000
    QuarterlyINR 149,068INR 14,90,684
    Half-yearlyINR 147,601INR 14,76,014
    AnnuallyINR 144,578INR 14,45,784
  • The maximum investment amount per family is limited to INR 15 lakhs
  • The maximum monthly pension receivable would be applicable for the family as a whole consisting of self, spouse and dependents. This means that if multiple family members have invested in the Pradhan Mantri Vaya Vandana Yojana, the aggregate pensions received by all should not exceed the maximum pension amount specified above

Important aspects of Pradhan Mantri Vaya Vandana Yojana

The senior citizen pension scheme of PMVVY has the following aspects which you should keep in mind –

  1. Loans

    You can avail a loan under the senior citizen pension scheme. The loan is available after the completion of three policy years and the amount of loan would be limited to up to 75% of the purchase price that you paid to invest in the scheme. If you avail a loan, an interest would also be payable for the same. This interest would be deducted from the pension amount payable to you. Moreover, if you do not repay the loan, the outstanding balance of the loan would be deducted from the death or maturity benefit.

  1. Maturity Benefit

    Pension payments are paid for ten full years and when the plan matures the last instalment of pension is paid along with the purchase price on maturity.

  1. Death Benefit

    In case of death of the pensioner, the purchase price would be refunded back to the nominee irrespective of the pension payments done under the senior citizen pension scheme.

  1. Maturity Benefit

    You can surrender the investment before the completion of 10 years. This surrender is allowed only if you or your spouse faces a critical or terminal illness. On surrendering you would get 98% of the purchase price refunded.

  1. Free-look cancellation

    If, after investment into the Pradhan Mantri Vaya Vandana Yojana, you are not satisfied, you can return the policy and claim a refund of your investment. LIC allows you a free-look period of 15 days which increases to 30 days if you have bought the policy online. During this free look period, you can cancel your investment and get a refund of the purchase price paid. If the policy is cancelled, the purchase price is refunded after deducting the stamp duty paid by the company on issuing the policy and any pension instalment that you might have received before cancellation.

Benefits of Pradhan Mantri Vaya Vandana Yojana

By investing in the senior citizen pension scheme called PMVVY, you get the following benefits –

  1. Regular pension incomes are promised for 10 years. Therefore, give you a source of income
  2. Since pension amount is guaranteed, you know beforehand the benefit that you would get from the senior citizen pension scheme
  3. Assured refund of your purchase price both in case of death and maturity
  4. A good rate of return which is 8.30% annually and which is higher than the returns promised by fixed deposits and other fixed-income instruments
  5. Loans allow your funds to meet emergency financial expenses that might arise at any time
  6. The rate of return is guaranteed under the scheme. If the scheme earns a lower return than promised, the shortfall is borne by the Central Government and so you are ensured of a return of 8% payable monthly
  7. Even in the case of suicides, the full purchase price is refunded. There is no exclusion for suicides

How to invest in Pradhan Mantri Vaya Vandana Yojana?

If you want to invest in the senior citizen pension scheme of PMVVY, you can do so through LIC. LIC offers you the option of buying Pradhan Mantri Vaya Vandana Yojana online as well as offline. Here are both the processes through which you can apply –

Offline process of buying PMVVY:

To buy the PMVVY policy offline, here are the steps which you need to take –

  1. Visit the nearest branch of LIC or meet with a LIC agent to get the application form
  2. Fill up the application form completely
  3. Attach the relevant documents with the form
  4. Submit the form and the documents at the LIC branch or to the LIC agent who would, in turn, deposit your application at the LIC branch
  5. LIC would, then, check the form and the documents submitted, verify your details and the policy would be issued

Online process of buying PMVVY:

To buy the senior citizen pension scheme online, the steps are as follows –

  1. Visit LIC’s official website which is https://www.licindia.in/
  2. On the home page, you can see an option to buy online policies. Choose ‘Click Here to Buy’
  3. You would be taken to a new page wherein you should choose ‘Pradhan Mantri Vaya Vandana Yojana’
  4. On the next page, the details of the plan would be shown. Click ‘Buy Online’
  5. An online application form would open. Fill up the form stating the required details
  6. You would also have to attach your documents and submit the form
  7. Once the form is submitted, it would be verified by LIC and if found satisfactory, the policy would be issued

Documents required for buying PMVVY:

To buy PMVVY, the following documents would have to be submitted –

  1. Your Aadhar Card
  2. Age proof
  3. Passport size photographs
  4. Address proof
  5. Documents which show that you are retired

So, if you are a retired senior citizen and are looking for a senior citizen pension scheme which gives you guaranteed returns you can opt for Pradhan Mantri Vaya Vandana Yojana and get assured pensions for ten years. The scheme also promises a lump sum benefit on death or maturity allowing you to create a legacy with your retirement funds. So, invest in PMVVY and create a source of guaranteed income even after retirement.

Frequently Asked Questions:

  1. What are the tax implications of investing in PMVVY?

    The investment that you do in the Pradhan Mantri Vaya Vandana Yojana is taxable in your hands. Moreover, the pension that you receive is also considered an income and are taxed in your hands at your income tax slab rates.

  1. I have invested INR 10 lakhs in the PMVVY scheme. Now my wife is also looking to invest. What is the maximum amount that she can invest?

    Since the maximum investment in PMVVY is INR 15 lakhs in aggregate for a family, your wife can invest a maximum of INR 5 lakhs.

  1. What is the interest rate on policy loan availed under Pradhan Mantri Vaya Vandana Yojana?

    The rate of interest depends on LIC and is not fixed. However, the current rate of interest on loans which have been sanctioned till 30th April 2018 is 10% per annum.

  1. Does any other insurance company offer PMVVY?

    No, only LIC is authorised to sell PMVVY scheme.

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