What is Pradhan Mantri Vaya Vandana Yojana?
Pradhan Mantri Vaya Vandana Yojana (PMVVY) is retirement cum pension scheme announced by the Indian Government. The plan is subsidised by the government and was launched in May 2017. The money invested by the purchasers of the scheme is called the purchase price. As the sovereign guarantees back the scheme, it offers an assured rate of return on investment. The scheme pays out regular pension and the frequency can be monthly, quarterly, or yearly. The PMVVY is an excellent alternative to traditional bank deposits.
Eligibility for PMVVY
There are no specific eligibility criteria as such for PMVVY scheme except that the subscriber must be a senior citizen (above the age of 60 years). The applicant must be an Indian citizen. There is no maximum entry age for PMVVY scheme. Also, the applicant must be ready to avail the policy term of ten years. The minimum purchase price is Rs 1.5 lakh, and it offers a monthly pension of Rs 1,000. The maximum purchase price is Rs 15 lakh, and it offers a monthly pension of Rs 10,000.
Documents Required for PMVVY
The following are the requisite documents to subscribe under the PMVVY scheme:
- Aadhaar card
- Proof of age
- Proof of address
- Passport size photo of the applicant
- Documents indicating that the applicant has retired from employment
Benefits of Pradhan Mantri Vaya Vandana Yojana
The following are some of the key benefits of subscribing to PMVVY scheme:
- Retirement financial security via pension payment
Under Pradhan Mantri Vaya Vandana Yojana, individuals who have availed this pension plan are allowed to receive a fixed amount at the end of a certain period chosen by an individual for a maximum term of 10 years.
- Assurance of returns
PM Vaya Vandana Yojana will initially provide an assured rate of return of 7.40 % per annum for the year 2020-21 per annum and thereafter to be reset every year.
Annual reset of the assured rate of interest with effect from April 1st of the financial year in line with the revised rate of returns of Senior Citizens Saving Scheme (SCSS) up to a ceiling of 7.75% with a fresh appraisal of the scheme on breach of this threshold at any point.
- Periodic payout options
Individuals can opt for monthly, quarterly, half-yearly or annual payout with the plan as per their financial requirements and convenience. The first payment must be performed immediately after plan purchase, depending on one’s chosen payment mode. For example, if a pensioner has chosen quarterly mode of payment, he/she should receive the first payment within 3 months from the date of policy purchase.
- Maturity benefit
Pradhan Mantri Vy Vandna Yojna also comes with the maturity benefit of receiving a lump sum purchase price of the plan along with the last instalment payout. This facility is valid on the survival of a pensioner until this policy tenure’s end.
- Death benefit
In the event of a pensioner’s death during the policy term, his/her beneficiary is entitled to receive an entire purchase amount as a claim on submitting required documents.
- Surrender value
Considering the monetary requirement to avail the treatment of critical illnesses for self or spouse, this scheme also allows a pensioner to surrender the policy. Policyholders can receive 98% of the purchase value during premature exit from the policy term.
- Free lock-in period
After purchasing a policy, if individuals are not comfortable with the terms and conditions mentioned in the contract, they are allowed to return this scheme within 30 days from the date of receipt in case of online purchase. Yet, free lock-in period for offline purchase is 15 days starting from policy purchase date. A reason for objection must also be enclosed while returning this policy.
Entire purchasing amount after a deduction of any applicable stamp duty or released pension payment needs to be refunded within its free lock-in period.
- Loan facility
After completing 3 successful policy years, individuals can avail loan against a Pradhan Mantri Vaya Vandana Yojana investment. Pensioners can borrow a maximum of 75% of the purchase amount as a loan. Interest calculated on loan is recovered from the pension payment as per the chosen frequency of loan repayment. The interest payable gets due on the pension payment date.
Furthermore, during maturity or surrender, loan outstanding will be recovered from its claim amount.
The pension-cum-insurance scheme also comes with a unique exclusion to this policy’s purchase price return. Under this exclusion, the entire purchase price is payable if a policyholder commits suicide.
Application Procedure for PMVVY
One can subscribe to the PMVVY scheme in the following ways:
i) Online procedure:
- Log onto the official website of LIC
- Select ‘pension plans’ under products and proceed
- Fill the relevant application form
- Submit the online application and upload the documents as requested
ii) Offline Procedure
- Collect the application form at any of the LIC branches
- Duly fill the application form
- Submit the duly filled application form by attaching all relevant documents
PMVVY Pension Policy
As mentioned earlier, the minimum purchase price is Rs 1,50,000 for a monthly pension of Rs 1,000. The amount of pension that a subscriber receives would depend on their purchase price:
|Pension mode||Minimum amount of pension||Minimum amount of investment||Maximum amount of pension||Maximum amount of investment|
|Monthly||Rs 1,000||Rs 1,50,000||Rs 10,000||Rs 15,00,000|
|Quarterly||Rs 3,000||Rs 1,49,068||Rs 30,000||Rs 14,90,684|
|Bi-annually||Rs 6,000||Rs 1,47,601||Rs 60,000||Rs 14,76,014|
|Annually||Rs 12,00||Rs 1,44,578||Rs 1,20,000||Rs 14,45,784|
PMVVY is a great investment option for senior citizens. This scheme can be considered by those senior citizens that are looking for a regular pension. However, to invest in this scheme, one should have a considerable amount in hand.