It can be purchased offline as well as online through Life Insurance Corporation (LIC) of India which has been given the sole privilege to operate this scheme, the finance ministry said in a statement on Thursday.
Pradhan Mantri Vaya Vandana Yojana (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.
"Scheme provides an assured return of 8 per cent per annum payable monthly (equivalent to 8.30 per annum effective) for 10 years," it said.
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 at the time of purchase, it said.
The scheme is exempted from Goods and Services Tax, it said, adding, loan up to 75 per cent of purchase price shall be allowed after 3 policy years to meet the liquidity needs.
Loan interest will be recovered from the pension installments and loan to be recovered from claim proceeds, it said, adding the scheme also allows for premature exit for the treatment of any critical or terminal illness of self or spouse.
On such premature exit, 98 per cent of the purchase price will be refunded.
On death of the pensioner during the policy term of 10 years, the purchase price will be paid to the beneficiary.
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 the LIC, it said.