India has a fairly basic social security system that caters to a very small percentage of the country's workforce. The country's main social security plan i.e. the EPFO can only be availed by only a handful of people. Due to the lack of social security infrastructure, the government has launched the PMVVY scheme to provide social security in the form of a pension to a larger percentage. This will enable the senior citizens to get a regular pension while maintaining a constant income during the falling interest rate regime.
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See Also: Pradhan Mantri Vaya Vandana Yojana
What is the Eligibility of the Pradhan Mantri Vaya Vandana Yojana?
Since the policy is meant to provide regular pension to senior citizens the eligibility criteria are designed especially for people of a certain age group. Citizens can get the benefits of the scheme only if they fulfill the following eligibility criteria:
- While the minimum entry age is capped at 60 years, there is no threshold for the maximum age of entry to the scheme.
- The overall tenure of the policy is 10 years. The scheme provides the flexibility to the subscribers to choose the frequency of payments during the inception of the scheme i.e. monthly, quarterly, half-yearly and annually
- The scheme currently provides assured returns of 8% per annum. The rate of interest remains effective throughout the tenure of the scheme.
- The minimum and maximum pension amount is also capped. The minimum pension amount per month is Rs. 1000 or Rs. 12,000 annually. Similarly, the maximum pension amount that can be earned through the scheme is Rs. 1000 per month or Rs. 1,20,000 per annum.
- The maximum pension ceiling is determined by including the entire family of the pensioner that comprises of the pensioner, his spouse, children and dependents.
See Also: Pradhan Mantri Vaya Vandana Yojana Rs 10000 Monthly Pension Plan
Benefits of the Pradhan Mantri Vaya Vandana Yojana:
The scheme provides the below-listed benefits to the policy subscriber:
- Under the scheme, the beneficiary is eligible to receive a pre-specified rate of interest of 8% per annum that will be maintained throughout the policy tenure
- The pension will be paid to the policyholder in arrears. The pensioner will choose the mode of pension payment.
- The scheme comes with attractive tax benefits like service tax and GST exemptions.
- The purchase price along with the final pension payment is provided to the subscriber if he/she survives the policy tenure. If the subscriber dies within the policy tenure then the maturity proceeds are given to the nominee.
- The policyholder can avail a loan against the policy on the completion of 3 policy years. The loan provided is up to 75% of the purchase price and the interest on the loan is deducted from the pension installments while the loan can be paid from the maturity proceeds.
- Policyholders can also exit the scheme prematurely for medical treatment of self or spouse. In such a scenario 98% of the purchase price shall be refunded.
- Any shortfall relating to the interest guaranteed and the interest accrued and the expenses relating to the administration will b subsidized by the government of India and reimbursed to the corporation.
- The account can be opened by individuals within 1 month of retirement. Thus government employees retiring with a corpus can use the scheme to generate additional income.
- The beneficiary will not have to go through the extensive documentation process. The application process is simple and the policy can be purchased only by submitting the application with the necessary documents that include KYC documents, proof of address and proof of identity, and documents relating to the retirement of the applicant.
- If unsatisfied with the terms of the policy, the policyholder can surrender the policy within 15 days from the date of issuance. However, the free lock-in period extends up to 30 days in case the policy is purchased online. The purchase price after the deduction of the stamp charges will be refunded to the applicant.
- The pension will be directly transferred to the savings account of the policyholder through NEFT or Aadhaar enabled payment system. The first installment will be paid to the policyholder based on the payment frequency chosen by the policyholder.
- The scheme is made available for all income groups and can be purchased by payment of a lump sum purchase price. The pensioner can either choose the amount of pension or the purchase price.
- The policy can be bought through both online and offline modes through the Life Insurance Corporation of India (LIC) which is authorized with the privilege of operating the scheme.
See Also: How to Invest in Pradhan Mantri Vaya Vandana Yojana: All You Need to Know
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