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Fincash » Government Schemes » Pradhan Mantri Vaya Vandana Yojana

Pradhan Mantri Vaya Vandana Yojana

Updated on July 14, 2024 , 2140 views

The Life Insurance Corporation (LIC) administers the Pradhan Mantri Vaya Vandana Yojana, a pension program for senior citizens over 60 that the Indian government announced. This program intends to provide senior folks with financial assistance by sending them regular pension cheques when interest rates fall.

Pradhan Mantri Vaya Vandana Yojana

The initial commencement date for the strategy was May 4, 2017, and it has now been extended until March 31, 2023. Now that you know the PMVVY scheme, let's delve deeper to comprehend its specifics.

Benefits of PM Vaya Vandana Yojana

The following are some advantages of the PM Vaya Vandana Yojana program:

  • Guaranteed Return: The pensioner will benefit from the plan's guaranteed return of 8% p.a. during the policy's ten-year period
  • Pension Payment: The pension is then paid in arrears if the retiree lives beyond the expiration of the policy. Furthermore, the pensioner can choose the preferred payment method
  • Death Benefit: Suppose the pensioner dies during the policy's term; in that case, the beneficiary is subject to receive the purchase money
  • Maturity Benefit: The purchase amount gets paid along with the final installment of the pension if the pensioner lives out the entire tenure of the policy
  • Loan Facility: The pensioner can use loans secured by the policy after it has been in effect for three years. A loan of up to 75% of the purchase amount can be obtained. The pension contribution being provided will cover the interest on the borrowing
  • Free-Look Period: If the policyholder is dissatisfied with the conditions of the insurance, they have 15 days to cancel the policy. If the insurance is brought online, the free-look period is 30 days. The policyholder will receive a refund for the purchase amount once stamp fees have been subtracted

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PMVVY Eligibility Requirements

You must confirm your eligibility for the PMVVY program before applying:

  • The person must be 60 years of age or older
  • No upper limit applies to the entrance
  • The PMVVY scheme has a ten-year lifespan
  • The lowest pension that can be paid each month, quarter, half-year, and annually is Rs. 1,000, Rs. 3,000, Rs. 6,000, and Rs. 2,000, respectively. The maximum pension that can be paid monthly, quarterly, half-year, and annually ranges from Rs. 1000 to Rs. 120,000
  • The entire family is taken into account while determining the pension cap

Required Documents for PMVVY

Here are all the essential documents that you need to carry and submit before enrolling for LIC PMVVY:

  • aadhaar card
  • Age proof
  • Residence proof
  • Applicant's passport-size pictures
  • Relevant declaration or documents to show the applicant's retired status

Applying for PMVVY

LIC Pradhan Mantri Vaya Vandana Yojana applications can be submitted offline or online. To apply for this program, you can take the actions listed below:

  • PMVVY Offline Method
  • You can obtain the application form from any LIC branch.
  • Then, you must complete the form with the necessary information.
  • Next, you must include the required self-attested documentation.
  • Once done, submit the form

PMVVY Online Method

You can apply for the Pradhan Mantri Vaya Vandana Yojana online by following the instructions below for a simple application procedure:

  • Visit LIC India's official website
  • Go to Products and then to Pension Plan
  • Now click on the table column where the policy is mentioned
  • You will find the Policy document. Fill it out and submit it with the self-attested copies of the document to your nearest LIC office

Purchase Price

Individuals can purchase the programme by paying the purchase price all at once. The pensioner can choose the pension amount or the purchase price amount. The table lists the minimum and maximum pension prices under various modes:

Pension mode Minimum Purchase Price in Rs. Maximum Purchase Price in Rs.
Monthly 1,50,000 15,00,000
Quarterly 1,49,068 14,90,683
Half-yearly 1,47,601 14,76,015
Yearly 1,44,578 14,45,783

When being charged, the Purchase Price will be rounded to the nearest rupee.

Method of Paying Pensions

The payment options include monthly, quarterly, half-yearly, and annual modes. Pension payments must be made using the National Electronic Fund Transfer or the Aadhaar Enabled Payment System (NEFT). The initial transfer must be made within one month, three months, six months, or a year of the policy's purchase date, depending on the payment method.

PMVVY Program's Taxes

Following Section 80C of the IT Act, the Pradhan Mantri Vaya Vandana Yojana (PMVVY) scheme does not offer a tax Deduction benefit. The scheme's profits will be taxed following current tax regulations, and the plan is not subject to the Goods and Services Tax (GST).

Early Exit from the Programme

The only situation when early termination of the insurance is permitted is when the policyholder or their spouse needs the money to treat a terminal or severe disease. At this time, t surrender value should be equal to 98% of the purchase price.

Most Percentage Invested in PMVVY

The PMVVY scheme allows the policyholder to invest up to Rs. 1.5 lakhs. The principal investor is subject to this cap. You must deposit a minimum of 1.5 lakhs to be eligible for the scheme's return of Rs. 1,000 each month.

Loan on Pradhan Mantri Vaya Vandana Yojana

After three policy years are complete, a loan facility is available. 75% of the purchase price is the maximum loan that can be given. At regular periods, the rate of interest that will be applied to the loan amount will be decided. The interest paid on the loan will be deducted from the pension payment due under the policy. The loan interest will accrue based on how frequently the policy's pension payments are made, and it'll be due on the due date of the pension. However, the outstanding debt must be repaid with claim profits at the moment of exit.

Conclusion

For retirees over the age of 60, PMVVY is a risk-free investment choice. The pension from this programme serves as a consistent source of Income to meet the needs of retired people. However, to invest in this programme, one must have enough Liquid Funds. In the event of a pensioner's passing during the policy term, the scheme offers death benefits in the form of a reimbursement of the total purchase price to the beneficiary.

Frequently Asked Questions (FAQs)

1. Is PMVVY Safe?

A: PMVVY should be your first pick if you are a risk-averse investor seeking a long-term recurring income strategy. SCSS and POMIS follow PMVVY after the Bank FDs in terms of safety.

2. Can someone invest in PMVVY and SCSS at the same time?

A: Individuals can make simultaneous investments totalling Rs. 15 lakhs in each savings plan. Thus, a combined investment of Rs. 30 lakhs can be made in two programmes. Both investment options have strong returns and are supported by the government.

3. Is the interest rate for this pension plan fixed?

A: Yes, the interest rate is between 8.30% and 9.30% annually. The government has set the interest rate regardless of Market instability to offer older citizens financial stability.

Disclaimer:
All efforts have been made to ensure the information provided here is accurate. However, no guarantees are made regarding correctness of data. Please verify with scheme information document before making any investment.
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