The Union Cabinet, in a meeting chaired by Prime Minister Narendra Modi, on Wednesday approved the doubling of investment limit in Pradhan Mantri Vaya Vandan Yojana (PMVVY) to Rs 15 lakh, from the current level of Rs 7.5 lakh. This will help senior citizens earn a pension of up to Rs 10,000 per month. The Cabinet also approved the time period for subscription of this scheme to March 31, 2020, from May 4, 2018. In Budget 2018, Finance Minister Arun Jatiley had proposed to increase the investment limit in PMVVY or Pradhan Mantri Vaya Vandana Yojana to Rs. 15 lakh. Financial planners say PMVVY offers more avenues to senior citizens to earn a steady regular income at times when fixed deposit interest rates are not that attractive.
Here are 10 things to know about new PMVVY (Pradhan Mantri Vaya Vandan Yojana) scheme:
1) The PMVVY scheme has been implemented through Life Insurance Corporation of India (LIC) to provide social security during old age and protect elderly persons aged 60 years and above against a future fall in their interest income due to uncertain market conditions.
2) The scheme provides an assured pension based on a guaranteed rate of return of 8 per cent per annum for ten years, with an option to opt for pension on a monthly, quarterly, half-yearly or annual basis.
3) The differential return, the difference between the return generated by LIC from the scheme and the assured return of 8 per cent per annum, is borne by the government as subsidy on an annual basis.
4) As of March 2018, a total number of 2.23 lakh senior citizens were getting regular pension under the Pradhan Mantri Vaya Vandan Yojana (PMVVY).
5) PMVVY can be purchased offline as well as online through Life Insurance Corporation (LIC) of India.
6) At the end of the policy term of 10 years, the pensioner gets back the purchase price (amount invested to earn pension) along with final pension instalment.
7) On death of the pensioner during the policy term of 10 years, the purchase price will be paid to the beneficiary.
8) Currently, a loan up to 75 per cent of purchase price (amount invested to earn pension) is allowed after three policy years to meet the liquidity needs.
9) The PMVVY scheme also allows for premature exit for treatment of any critical/terminal illness of self or spouse.
10) On such premature exit, 98 per cent of the purchase price will be refunded.