Pradhan Mantri Vaya Vandana Yojana or popularly known as Pradhan Mantri Pension Yojana or Prime Minister Pension Scheme is a government-subsidised pension scheme for senior citizens.. It addresses the long-standing concerns of senior citizens (varisht nagarik) who want a pension plan where their savings are protected and maximum returns guaranteed. If you are a senior citizen worried about market forces eating into your savings, then you may rest easy with this scheme. .
Features of Pradhan Mantri Pension Yojna or Pradhan Mantri Pension Yojna:
- It is available for one year, from 4 May 2017 to 3 May 2018.
- It is eligible for Indian citizens who are 60 years or more of age.
- Sale is through Life Insurance Corporation of India offices/branches.
- There is no maximum age limit for entry.
- The pension period or policy term is 10 years.
- The pension will be payable to the pensioner surviving during the policy term of 10 years.
- The plan provides for assured pension returns of 8 per cent per annum (8.30 per cent annualised).
- The minimum purchase price for entering this plan is Rs 144,578 (one time) for receiving pension on a regular basis. The maximum purchase price is Rs 722,892 (one time).
- The minimum pension amount payable will be Rs 12,000 (Rs 11,999.97 to be exact) annually. The maximum amount will be Rs 60,000 (Rs 57,831.36 to be exact) annually.
- No income tax benefit is offered for this plan.
- Surrender value benefit is available. You can surrender this policy during the policy period under certain exceptional circumstances (for example, if you require money for treatment of a critical/terminal illness of self or spouse). Surrender value payable will be 98 per cent of purchase price.
- Assignment facility is available only against LIC for obtaining a loan.
- Loan facility is available on this plan after completion of three years and the same will be restricted to 75 per cent of the purchase price. Loan interest will be recovered from pension amount payable under the policy.
- A 'free look' period of 15 days is available from the date of receipt of policy bond, if policyholder is not satisfied with the terms and conditions' of the policy. For online purchase, the free-look period is 30 days.
Prime Minister Pension Scheme Benefits
On survival of the pensioner during the policy term, pension in arrears shall be payable to him/her depending on the chosen mode of pension payment. The pensioner has the option to choose either the amount of pension or the purchase price.
|Mode of Pension||Minimum
Courtesy LIC CO Circular No.CO/PD/91, dated 02.05.2017
On death of pensioner during the policy term, the purchase price shall be refunded to the nominee/legal heir.
On survival of pensioner till the end of the policy term, purchase price and the final pension instalment shall be payable.
Disadvantages of Pradhan Mantri Pension Yojna or Pradhan Mantri Vaya Vandana Yojana
- The amount is locked in for 10 years; so it may not be available if required urgently (except in illness).
- The pension is not adjusted to inflation. The purchasing power of, say, Rs 6,000 may reduce to half in 10 years.
- There are no tax benefits on the pension you receive.
The Prime Minister’s Pension Scheme is a simple and safe product offering assured returns and is backed by the government. But you may want to look at other investments that offer higher returns, too.
Other Pension Schemes: