PM Vaya Vandana Yojana

What is PM Vaya Vandana Yojana ?

Prime Minister Vaya Vandana Scheme is a guaranteed pension scheme exclusively for senior citizens. This scheme provides immediate pension. If one deposits the money today he will start receiving a pension from next month onwards.

Background of PMVVS

This scheme was launched on 04-May-2017 with the aim of providing long term, guaranteed and immediate pension to senior citizens. When the scheme was launched in May-2017, it offered a time period of 1 year (till May-2018) to deposit under this scheme. But, in Budget 2018, it was announced that senior citizens can deposit in this scheme till 31-March-2020. In May-2020, the Government further extended this scheme till 31-March-2023. So, one can deposit in this scheme anytime between 04-May-2017 and 31-March-2023. This scheme is operated by LIC of India on behalf of GOI.

How Does PMVVS Work

Deposit a lump sum amount and open an account.

Choose desired pension frequency (monthly, quarterly, half-yearly or yearly).

Receive pension on a regular basis for 10 years as per chosen frequency.

At the end of 10 years get the deposit amount back if alive.

Otherwise on death of the holder during the term of 10 years pension gets stopped immediately and deposit amount refunded to your nominees or legal heirs

Features

Scheme offered by the Government of India for senior citizens

Scheme exclusively for Safe investment option

Guaranteed pension, Various pension frequencies.

No GST is charged

Income Tax Benefits

The deposit amount is not eligible for deduction under Section 80C of Income Tax Act. The pension amount received in this scheme is taxable under “Income from other sources” in IT Return and will be taxed as per applicable income tax slabs. There is no tax on the deposit amount when it is paid back at the end of the term or when it is paid to nominees in case of death. There is no TDS.

Who can open the Account

This scheme is exclusively for senior citizens. So persons of at least 60 years of age can join in this scheme. There is no upper limit on the age to enter in this scheme.

How Do I Open The Account

This scheme is operated by LIC (Life Insurance Corporation) of India.

through online at www.licindia.in or

through offline at LIC offices or through LIC agents

Last date for deposit

This scheme is a limited time offer scheme. The last date to deposit in this scheme will be 31-March-2023. Earlier, the last date to deposit in this scheme was 31-March-2020.

Term: This scheme is for the period of 10 years.

Pension Frequency

In this scheme, one can choose any one of the following modes.

Monthly

Quarterly

Half-yearly

Yearly

The pension amount will be paid to you at the end of the chosen pension frequency. The following table describes when you will receive pension.

Pension Frequency

Monthly

Quarterly

Half-Yearly

Yearly

When will you get Pension?

At the end of every month

At the end of every 3 months

At the end of every 6 months

At the end of every year

How Much amount can be deposited

The deposit amount varies based on chosen pension frequency. The following table lists the minimum and maximum deposit amount for various pension frequencies.

Pension Frequency

Monthly

Quarterly

Half-Yearly

Yearly

Minimum Deposit Amount (Rs.)

1,62,162

1,61,074

1,59,574

1,56,658

Maximum Deposit Amount (Rs.)

15 Lakhs

14,89,933

14,76,064

14,49,086

Note: Please note that the maximum deposit amount is per senior citizen which means one can have one or more accounts. The total deposit amount of all the accounts should not exceed the maximum deposit amount for the chosen pension frequency. For example, let us assume that one has 3 accounts under this scheme and has chosen to receive quarterly pension. In this case, the total deposit amount of all the 3 accounts should not be more than Rs. 14,89,933. In addition, if the spouse is also a senior citizen, then he or she can also invest a maximum of Rs. 15 Lakhs. So one can deposit together with a spouse a maximum of Rs. 30 Lakhs.

How Much Pension one can get?

The pension amount varies based on the deposit amount and the chosen pension frequency. The following table lists minimum and maximum pension amounts for various pension frequencies.

Pension Frequency

Monthly

Quarterly

Half-Yearly

Yearly

Minimum Pension (Rs.)

1,000

3,000

6,000

12,000

Maximum Pension (Rs.)

9,250

27,750

55,500

1,11,000

Is Pension Guaranteed?

Yes. The pension amount is guaranteed for the entire term of 10 years.

Rate of Interest payable (%)

The interest rates offered in this scheme for various pension frequencies are given below.

Pension Frequency

Monthly

Quarterly

Half-Yearly

Yearly

Annual Interest Rate (%)

7.40%

7.45%

7.52%

7.66%

The interest rate (on the day of account opening) will remain the same throughout the tenure of 10 years. It will not change even if there are changes to the interest rate thereafter. From May-2017 to 31-March-2020, the interest rate was 8% for the monthly pension frequency. But, in May-2020, the Government has announced some important changes to the interest rate of this scheme:

the interest rate will be revised every financial year

the interest rate for the financial year 2020-21 will be 7.4% for the monthly pension

the revised interest rate will be in line with the interest rate of Senior Citizens Savings Scheme (SCSS) upto a limit of 7.75%

Is there any Maturity Benefit : No

Extension : Extension features are not allowed in this scheme.

Premature Closure

Premature closure option is allowed in this scheme. One can leave this scheme in the middle of 10 years only in exceptional situations like when in need of money for the treatment of critical diseases of self or spouse. There is a penalty amount of 2% of the deposit amount that means only 98% of the deposit amount will be refunded

What If holder of the Scheme dies during the term of the Policy

If the holder dies during the term of 10 years, then the pension gets stopped immediately and the entire deposit amount given back to nominees or legal heirs.

GST: GST (Goods and Services Tax) is not charged in this scheme.

Loan Facility

Loan facility is available in this scheme after completion of 3 years. The maximum loan amount that you can get is 75% of the deposit amount. Interest rate (%) will be decided from time to time. For example, for the loans granted till 30-April-2018, the annual interest rate is 10% payable half-yearly. The loan interest will be recovered from the pension amount and outstanding loan will be recovered out of the deposit amount at the time of maturity.

Free Look Period

After depositing in the scheme, if one is not happy with Policy can be returned to LIC within 15 days and money is refunded byu LIC. Free look period is 15 days from the date of receipt of the policy. If one has deposited online, then the free look period is 30 days.

NRI: NRI (Non Resident Indians) can’t invest in this scheme.

Nomination: Nomination facility is available under the Scheme.

Benefits of PM Vaya Vandana Yojana

Retirement Security

You receive a fixed amount of money at the end of a certain period chosen by you.

Return Assurance

It will initially provide an assured rate of return of 7.40 % per annum for the year 2020-21.

Periodic Pay

You can opt monthly, quarterly, half yearly or annual payout as per your need and requirements.

Maturity Benefits

You will receive a lump sum purchase price of the plan with the fixed regular installments.

Death Benefit

In such unfortunate events, the pensioner's beneficiary receives an entire purchase amount as claim.

Free Lock In Period

You can return this scheme in 30 days of purchase with a reason without any additional fees.

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