LIC Pradhan Mantri Vaya Vandana Yojana (PMVVY) is a Pension Scheme announced by the Government of India for the senior citizens, above 60 years of age that assures guaranteed pension for 10 years.
The scheme was available from 4th May 2017 to 31st March, 2020. Further, the scheme is now extended up to 31st March, 2023 for a further period of three years beyond 31st March, 2020.
The Scheme will provide an assured pension of 7.40% p.a. that will be payable monthly. The scheme can be bought online via the LIC website or offline. The scheme is available up to 31st March, 2023.
Benefits of the PMVVY
1. Assured rate of interest: The scheme provides initially an assured rate of return of 7.40 % per annum for the year 2020-21, and it will be reset every year.
2. Pension payment by choice: Pension is payable at the end of each period, during the policy term of 10 years, as per the frequency of monthly/ quarterly/ half-yearly/ yearly as chosen by the pensioner at the time of purchase.
3. GST benefit: The scheme is exempted from Goods and Service Tax (GST).
4. Loan Facility: Loan up to 75% of the purchase price shall be allowed after 3 policy years (to meet the liquidity needs). Loan interest shall be recovered from the pension installments whereas loan to be recovered from claim proceeds.
5. Premature Exit due to illness: The scheme also allows for premature exit for the treatment of any critical/ terminal illness of self or spouse. On such a premature exit, 98% of the purchase price shall be refunded.
6. Purchase price paid to the beneficiary: On the death of the pensioner during the policy term of 10 years, the purchase price shall be paid to the beneficiary or nominee of the pensioner.
7. Easy to buy: The Scheme can be purchased offline as well as online through Life Insurance Corporation (LIC) of India which has been given the sole privilege to operate this Scheme. To buy online, visit http://www.licindia.in/.
Pension for the family as a whole
The ceiling of the maximum pension is for a family as a whole. In simple words, it means that the total amount of pension under all the policies allowed to a family under this plan shall not exceed the maximum pension limit.
The family for this purpose will comprise of pensioner, his/her spouse, and dependents.
Eligibility Conditions and Other Restrictions
Minimum Entry Age: 60 years (completed)
Maximum Entry Age: No limit
Policy Term: 10 years
Investment Limit: Rs. 15 lakh per senior citizen
Minimum Pension: Rs. 1,000/- per month
Rs. 3,000/- per quarter
Rs. 6,000/- per half-year
Rs. 12,000/- per year
Maximum Pension: Rs. 12,000/- per month
Rs. 30,000/- per quarter
Rs. 60,000/- per half-year
Rs. 1,20,000/- per year
Payment of Purchase Price
The scheme can be purchased by payment of a lump sum Purchase Price. The pensioner has an option to choose either the amount of pension or the Purchase Price. The minimum and maximum Purchase Price under different modes of pension will be as under:
Mode of pension payment
The modes of pension payment are monthly, quarterly, half-yearly & yearly. The pension payment shall be through NEFT or Aadhaar Enabled Payment System. The first installment of pension shall be paid after 1 year, 6 months, 3 months, or 1 month from the date of purchase of the same depending on the mode of pension payment i.e. yearly, half-yearly, quarterly, or monthly respectively.
Surrender Value in premature exit
The scheme allows premature exit during the policy term under exceptional circumstances like the Pensioner requiring money for the treatment of any critical/terminal illness of self or spouse. The Surrender Value payable in such cases shall be 98% of the Purchase Price.
Free Look period
If a policyholder is not satisfied with the “Terms and Conditions” of the policy, then he/she may return the policy to the Corporation within 15 days (30 days if this policy is purchased online) from the date of receipt of the policy stating the reason of objections.
The amount to be refunded within the free look period shall be the Purchase Price deposited by the policyholder after deducting the charges for Stamp duty and pension paid if any.