The Union Cabinet on Wednesday has extended Pradhan Mantri Vaya Vandana Yojana (PMVVY), a pension scheme for those who are above 60, for a period of three years. The social security scheme for senior citizens will be valid till March 2023.
The government has fixed its annual rate of return at 7.4% for financial year 2020-21. Centre will reset the interest rate every year, according to an official release.
Launched in 2017, Pradhan Mantri Vaya Vandana Yojana (PMVVY) offers a guaranteed payout of pension to senior citizens every month. The scheme can be purchased offline as well as online, through Life Insurance Corp. of India. Senior citizens have time till March 31 to invest in Pradhan Mantri Vaya Vandana Yojana which provides higher return than any bank.
Eligibility: Any individual who is 60 or above the age of 60 can avail the benefits of Pradhan Mantri Vaya Vandana Yojana (PMVVY) scheme. There is no entry age.
Maximum investment: One can invest a maximum amount of ₹15 lakh under Pradhan Mantri Vaya Vandana Yojana (PMVVY) scheme. The tenure of the policy is set at 10 years.
How to buy: You can buy PMVVY scheme from Life Insurance Corp. of India. This pension scheme is available via both offline and online mode. You can visit the nearest LIC branch or log on to the official website of LIC to purchase this annuity scheme. A policyholder has an option to return the policy within 15 days of the purchase. If the policy is purchased online, the free look period is 30 days.
Return: The scheme offers an assured return of 7.4% per annum for financial year 2020-21. Senior citizens can draw a minimum pension of ₹1,000 per month depending on the amount invested in the scheme. The maximum pension amount is limited at ₹9,250 per month. The minimum investment has also been revised to ₹1,56,658 for pension of ₹12,000 per annum and ₹1,62,162 for getting a minimum pension amount of ₹1000 per month under the scheme, according to official release. The insuree will receive a pension amount based on the premium given by an individual.
Interest rate will be reset every year: The Cabinet approved "an annual reset of assured rate of interest with effect from April 1 of financial year, in line with revised rate of returns of Senior Citizen Savings Scheme (SCSS) up to a ceiling of 7.75%, with fresh appraisal of the scheme on breach of this threshold at any point", according to official release.
Mode of pension payment: Senior citizens will have an option to get the pension in four ways — monthly, quarterly, half-yearly and yearly. The first installment of pension shall be paid after one year, six months, three months or one month from the date of purchase of the same depending on the mode of pension payment. One will receive the pension payment through NEFT or Aadhaar-enabled payment system.
Loan: Any individual can apply for loans after completion of three years. The maximum loan that can be granted shall be 75% of the purchase price. The interest on the loan will be recovered from the pension payment that is being made through NEFT or Aadhaar-enabled payment system.
If pensioner dies: If the pensioner passes away during the policy tenure, the benefits will forwarded to the nominees.
Free look period: A policyholder has an option to return the policy within 15 days of the purchase. If the policy is purchased online, the free look period is 30 days.
Tax benefits: Pradhan Mantri Vaya Vandana Yojana (PMVVY) scheme does not provide tax deduction benefit under section 80C of the Income Tax Act. Returns from this scheme will be taxed as per existing tax laws.The scheme is exempted from Goods and Services Tax (GST).