Explore the benefits and intricacies of the Pradhan Mantri Vaya Vandana Yojana (PMVVY), a government-backed pension scheme designed exclusively for senior citizens aged 60 and above.
Uncover the eligibility conditions, payment options, and the scheme’s extended timeline until March 2023. Secure your financial future with this comprehensive guide.
Benefits of the Pradhan Mantri Vaya Vandana Yojana Scheme
The Pradhan Mantri Vaya Vandana Yojana (PMVVY) stands as a beacon of financial security for senior citizens, offering an assured rate of return of 7.40% per annum for the year 2020-21, subject to reset annually.
Throughout the policy term of 10 years, beneficiaries can enjoy a steady pension, payable monthly, quarterly, half-yearly, or yearly as per their preference.
One of the standout features of PMVVY is the exemption from GST, providing an added financial advantage. Upon survival until the end of the policy term, the purchase price, along with the final pension installment, becomes payable. In the unfortunate event of the pensioner’s demise during the policy term, the purchase price is disbursed to the beneficiary.
Eligibility Conditions and Restrictions
The scheme welcomes individuals who have completed 60 years of age, with no upper age limit. The policy term spans a decade, and the investment limit is set at Rs 15 lakh per senior citizen.
With a minimum monthly pension of Rs. 1,000 and a maximum annual pension of Rs. 1,11,000, the scheme accommodates diverse financial needs.
It’s important to note that the maximum pension limit applies to the entire family, encompassing the pensioner, spouse, and dependents. The scheme is available for purchase both offline and online through the Life Insurance Corporation (LIC) of India.
Payment of Purchase Price
Prospective beneficiaries have the flexibility to acquire the policy by paying a lump sum purchase price. The minimum and maximum purchase prices vary based on the chosen mode of pension—whether monthly or yearly.
Mode of Pension Payment
Pensioners can receive their payments through NEFT or Aadhaar Enabled Payment System, with the first installment disbursed after 1 year, 6 months, 3 months, or 1 month from the purchase date, depending on the chosen payment frequency.
Surrender Value and Loan Facility
PMVVY understands the need for financial flexibility. It allows for premature exit under exceptional circumstances, such as critical illness, with a surrender value of 98% of the purchase price. Additionally, a loan facility becomes available after 3 policy years, offering up to 75% of the purchase price to meet liquidity needs.
The interest rate for the sanctioned loan is determined periodically, ensuring fair terms for the beneficiaries. The accrued loan interest is recovered from pension installments and settled from claim proceeds at the policy’s exit.
Free Look Period and Exclusions
To ensure satisfaction, a 15-day (30 days for online purchases) free look period allows policyholders to return the policy, receiving a refund of the purchase price after deducting applicable charges.
The Pradhan Mantri Vaya Vandana Yojana makes no exclusions based on suicide, offering full purchase price payment irrespective of such circumstances.
Frequently Asked Questions
Is the monthly interest payout exempt from income tax?
The scheme provides tax exemption on the monthly interest payout.
Should premature exit be allowed without reason?
Premature exit is permitted under exceptional circumstances, ensuring flexibility based on investors’ choices.
Is a life certificate mandatory every 5 years?
Yes, a life certificate is mandatory every 5 years.
Navigate the financial landscape confidently with the Pradhan Mantri Vaya Vandana Yojana. Secure your golden years with this government-backed pension scheme designed for the well-being of senior citizens.