Pension scheme for senior citizens with 8% fixed rate

Tribune News Service

New Delhi, July 20

At a time when interest rates are falling, resulting in depleted savings, the government will formally launch a pension scheme for senior citizens tomorrow at a fixed return of 8%.

Finance Minister Arun Jaitley will launch the scheme — Pradhan Mantri Vaya Vandana Yojana (PMVVY) tomorrow.

PMVVY is a pension scheme announced by the government exclusively for the senior citizens aged 60 years and above which is available from May 4, 2017 to May 3, 2018.

The scheme can be purchased offline and online through Life Insurance Corporation (LIC) of India, which has been given the sole privilege to operate this scheme.

In an era of falling interest rates, the scheme provides an assured return of 8% per annum, payable monthly (equivalent to 8.30% p.a. effective) for 10 years.

The 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 or yearly as chosen by the pensioner at the time of purchase.

The scheme is exempted from GST. On survival of the pensioner to the end of the policy term of 10 years, purchase price along with final pension instalment shall be payable.

The minimum purchase price for a yearly scheme is Rs 1.44 lakh and the maximum is Rs 7.22 lakh. The ceiling of maximum pension is for a family as a whole and the family will comprise pensioner, his/her spouse and dependants.

The shortfall owing to the difference between the interest guaranteed and the actual interest earned and the expenses relating to administration shall be subsidised by the Government of India and reimbursed to LIC.

On death of the pensioner during the policy term of 10 years, the purchase price shall be paid to the beneficiary.

Pradhan Mantri Vaya Vandana Yojana 

• It can be purchased offline as well as online through LIC which has been selected to operate the scheme
• It provides an assured return of 8% per annum payable monthly (equivalent to 8.30% per annum ) for 10 years
• 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
• The scheme is exempted from GST and loan up to 75% of purchase price shall be allowed after 3 policy years
• The scheme also allows for premature exit for the treatment of any critical or terminal illness of self or spouse.