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How to Invest in Pradhan Mantri Vaya Vandana Yojana: All You Need to Know

IndianMoney.com Research Team | Posted On Tuesday, February 18,2020, 02:48 PM

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How to Invest in Pradhan Mantri Vaya Vandana Yojana: All You Need to Know

 

 

The Government of India in collaboration with LIC has introduced a pension scheme for a limited period, called the Pradhan Mantri Vaya Vandana Yojana. The scheme came into effect in May 2017 and can be availed till 31st March 2020. The scheme is available through both online and offline modes and can be availed from the LIC official website.

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How to invest in Pradhan Mantri Vaya Vandana Yojana: All You Need to Know

The scheme serves as social security to senior citizens after reaching a certain age which is paid back to them in regular installments. Here is all you need to know about PMVVY:

What is the Objective of the PMVVY Scheme?

The main objective of the PMVVY scheme is to provide senior citizens with monetary benefits and protect them against any uncertainties and fall in the bank interest rates and other profit generating avenues. It is a retirement income scheme that aims to provide enough monetary support to senior citizens such that basic financial needs are met.

See Also: Aadhaar Made Mandatory for Subscribers of PMVVY Pension Scheme

What is the Eligibility for PMVVY?

Following criteria need to be met in order to be eligible for availing the benefits of PMVVY:

  1. Minimum age must be 60 years; there are no maximum age criteria.
  2. A maximum benefit period of 10 years can be availed under PMVVY
  3. The minimum amount to be earned as pension on yearly, half-yearly, quarterly and monthly basis are Rs 12,000, 6,000, 3,000 and 1,000 respectively.
  4. The maximum amount to be earned as pension under PMVVY on yearly, half-yearly, quarterly and monthly basis are Rs 1,20,000, 60,000, 30,000 and 10,000 respectively.

Note: While calculating the maximum pension amount, the pensioner’s whole family is considered which includes spouse, dependents, and the pensioner himself. 

What are The Benefits of The PMVVY Scheme?

Following are the benefits under the PMVVY scheme:

  1. Assured return on the policy at the rate of 8% for a maximum duration of 10 years.
  2. If the pensioner outlives the duration of the scheme, then the pension is paid in the form of arrears and the mode of pension gets decided by the pensioner.
  3. If during the tenure of the policy the pensioner passes away, the beneficiary or the nominee gets the purchase price of the scheme.
  4. If the pensioner outlives the tenure of the policy; then the purchase price along with the final pension installments are paid to the pensioner.
  5. The PMVVY scheme can be used as a security to avail loans. Once the pensioner completes 3 years of the policy, he/she can avail a loan against PMVVY Scheme. There is an upper limit on the loan value i.e. a maximum of 75% of the purchase price can be taken as a loan. The pension payment is used to recover the loan interest as availed. If the availed loan is sanctioned till April 30th, 2018, the rate of interest is fixed at 10% and can be paid on a half-yearly basis throughout the entire policy term.
  6. There is a free-look period with the PMVVY scheme as well. It allows interested parties to try the scheme for an initial period of 15 days and if not satisfied; they can surrender the policy within those 15 days when the policy is bought offline. If the policy is bought online, the free look period is 30 days. The amount that is refunded on surrender is after deducting stamp charges.
  7. If the policyholder suffers critical or terminal illness, then a premature surrender of the policy can be made. Only 2% of the policy purchase price is deducted as a penalty in such cases.

See Also: Pradhan Mantri Vaya Vandana Yojana Rs 10000 Monthly Pension Plan

How To Buy the PMVVY Scheme?

The scheme can be availed both online and offline through the LIC. The purchase price needs to be paid in a lump sum and the pension amount can be selected from the available options.

Here is a List of Scheme Purchase Price:

MODE OF PENSION

MINIMUM PURCHASE PRICE (Rs)

MAXIMUM PURCHASE PRICE

(Rs)

Yearly

1,44,578

14,45,783

Half-yearly

1,47,601

14,76,015

Quarterly

1,49,068

14,90,683

monthly

1,50,000

15,00,000

In What Modes is the Pension Paid Under PMVVY?

Under the scheme, the pension is paid on a yearly, half-yearly, quarterly and monthly basis. The policyholders can choose from the available options as per requirements. The pension payment can be done only in two ways - NEFT (National Electronic Fund Transfer) or AEPS (Aadhar Enabled Payment System).

The maximum permissible time limit to make the first pension payment is 1 year, 6 months, 3 months and 1 month respectively.

See Also: Pradhan Mantri Vaya Vandana Yojana

How is PMVVY Taxed?

There is no tax deduction like Section 80C for PMVVY Scheme. Neither is the income tax free. Returns are taxed as per applicable tax laws.

Is There any Exclusion Under the PMVVY Scheme?

There are various schemes that exclude suicide from death benefits. However, under the PMVVY, the full purchase price is paid in case the policyholder commits suicide.

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