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Pradhan Mantri Vaya Vandana Yojana

Pradhan Mantri Vaya Vandana Yojana is a pension scheme for senior citizens which has been introduced by the Government of India. The scheme was launched officially on 21st July 2017 by Finance Minister of India Arun Jaitley, although it has been available for purchase since its soft launch on 4th May 2017. The scheme is a boon for senior citizens in the times of falling interest rates. The aim of the scheme is to give senior citizens regular pension. The scheme can be purchased offline and online through Life Insurance Corporation of India as they have been given sole rights to operate it. LIC has sold 58,152 PMVVY schemes generating INR. 2,705 crore since its launch on May 4, 2017.

Features of Pradhan Mantri Vaya Vandana Yojana

  • There is no maximum age of entry in the scheme for senior citizens
  • It provides assured rate of return of 8% to 8.30% per annum
  • Maturity benefit of return of purchase price is given in this scheme
  • The scheme allows premature exit and 98% of purchase price is paid back
  • The scheme can be purchased by paying lump sum amount ranging from INR 1.5 lakhs to maximum INR 7.5 lakhs for monthly pension
  • Pension payment is made through NEFT or Aadhar card linked payment system

Benefits of Pradhan Mantri Vaya Vandana Yojana

  • There is no maximum entry age.
  • It provides assured pension.
  • It provides maturity benefit of return of purchase price.
  • Premature exit is allowed and 98% of purchase price is given back.
  • One may buy the scheme by payment of a large amount that may range from INR 1.5 lakhs to INR 15 lakhs for the sake of monthly pension.
  • Payment of pension is done via NEFT or Aadhaar card linked payment system

Pension Payments

This scheme gives regular pension for 10 years to senior citizens for the chosen time frame.

Death Benefit

In the event that the policyholder dies, then the purchase price of this scheme will be refunded towards the nominee.

Maturity Benefit

This scheme offers maturity benefit. Should the policyholder survive the schemes duration, then he/she gets the purchase price back with the final instalment of the pension.

Surrender Value

This scheme allows withdrawal from the scheme for the policy term duration under circumstances such as money required in an emergency for treatment of critical or terminal illness of self or spouse. The surrender value payable is 98% of purchase price.

Loan

After an individual has held the scheme for three years, a loan of 75% is available on the purchase price. Interest of the loan will be adjusted in the pension instalments and loan of the amount will be recovered from claim proceeds. For the loan sanctioned until 30th April, 2018, the interest rate applicable is 10% p.a. paid out half-yearly for the whole term of the loan.

Free Look period

The policy gives a 15 days free look period upon offline purchase and 30 days when it is bought online. If the policyholder is unsatisfied with the terms and condition, he or she may return the policy to the corporation and get the buying price deposited without the charges on stamp duty.

Eligibility criteria of Pradhan Mantri Vaya Vandana Yojana

Minimum Entry Age60 years (Completed)
Maximum Entry AgeNo Limit
Policy Term10 Years
PensionMonthly (INR)Quarterly (INR)Half-Yearly(INR)Yearly (INR)
Minimum Pension1,0003,0006,00012,000
Maximum Pension1000030,00060,000120,000

Other details of Pradhan Mantri Vaya Vandana Yojana

  • Free Look Period: The policy offers free look period of 15 days if purchased offline and 30 days if it was purchased online. If the policyholder is not satisfied with the terms and condition he/she may return the policy to the corporation and get the purchase price deposited minus the charges on stamp duty paid if any.

  • Surrender Value: The scheme allows you to withdraw from the scheme during the policy term under exceptional circumstances such as money required in an emergency for treatment of critical or terminal illness of self or spouse. The surrender value paid back will be 98% of purchase price.

  • Exclusions of Pradhan Mantri Vaya Vandana Yojana: There are no exclusions under Pradhan Mantri Vaya Vandana Yojana. Even on suicide, the scheme will pay back the full purchase price.

  • Investment period: 10 years

  • Applicant Age: 60+ years

  • Amount of investment: Up to INR 15 lakh per family.

  • Tax: No benefit from section 80C. Pension income is taxable.

  • Good for: Senior citizens seeking regular income.

Pradhan Mantri Vaya Vandana Yojana Review

Pradhan Mantri Vaya Vandana Yojana is an initiative taken by the Indian government for senior citizens. It allows them to have a systematic regular pension through an organised and well-planned investment scheme. The flexibility when withdrawing and availing loan facility in 3 years is a great customer friendly feature offered in this scheme.

FAQs on Pradhan Mantri Vaya Vandana Yojana

Can senior citizen invest in ELSS?

One must understand that even after retirement, a segment of your corpus can be set aside to be utilised after five years or more of duration. This amount must be invested in equity so that one can get returns that beat inflation. For deduction against taxable income, ELSS is a great option.

Can we apply online for Atal Pension Yojana?

Yes, by following these steps

  1. Login to any of the banks authorized under the scheme like ICICIBank.com
  2. Select Customer Service
  3. Select 'Service Request'
  4. Click on "Enroll for Atal Pension Yojana" under the "Bank Accounts" segment
  5. Fill required details
  6. Account will be activated in 1 working day
  7. Auto Debit gets started.

Can we get monthly interest on fixed deposits?

A fixed deposit is an investment that gives better interest rates compared to a regular savings account. The account holder needs to save a significant amount to a financial institution for a pre-decided time frame. The duration ranges from a month to 60 months. Interest can be received by the account holder in intervals -fortnightly, monthly, quarterly or annually.

Can we withdraw FD interest monthly?

Definitely, one may take away the interest of Fixed Deposit on monthly basis. Once you invest the money in FD, you get interest on the principal amount. This can also be obtained as per your wish in your savings account on a monthly, quarterly, half-yearly or yearly basis.

How can I earn money after 60?

The bank fixed deposit is a popular investment option due to its assured return. As per the Deposit Insurance and Credit Guarantee Corporation (DICGC) regulation, each of depositor of a bank is insured to a maximum of INR1 lakh putting together the principal and interest corpus.

How can I invest in senior citizen savings scheme?

The senior citizens savings scheme can be initiated in any of the authorized banks or post office branch across the country using the following documents:

  1. Form A is required for opening SCSS Account.
  2. ID proof - PAN card, Passport.
  3. Address proof - Telephone bill, Aadhar card.
  4. Age Proof Document is required - Passport, Senior Citizen Card, a Birth certificate issued Corporation or registrar of births and death, Voter ID card, PAN card etc.
  5. 2 Passport size photographs. The documents need to be self-attested.

How can I open a senior bank account in SBI?

To open a SCSS Account with SBI, the depositor needs to visit any branch office and apply through Form A. Besides this, he/she needs to provide a proof of age and deposit this amount in multiples of 1000. One can maintain more than one account, when the total deposits in all accounts is within INR 15 Lakhs.

Is senior citizen saving scheme tax free?

No. The interest earned from the SCSS is completely taxable in terms of income. The income is open to tax deduction at source when it crosses INR10,000 in a financial period.

How does monthly income mutual fund plan work?

The MIP is a debt mutual fund that invests a small segment of the funds in equities. This stands for consistent income as periodic dividend payouts. The SWP under a MIP can function as a constant income source for investors. Much like a banker’s MIS.

How should I invest my retirement money?

One may put the money given by your employer into a retirement account. Such plans are good because the money grows tax-free until it is withdrawn at retirement. Also, you get to escape taxes on the money invested in the plan or the money withdrawn from the plan.

Is there any monthly income scheme in banks?

Yes. There are various monthly FD income schemes with banks across India.

What are best savings options for senior citizens?

ModeRisk
Direct EquityHigh
Equity Mutual FundModerate – High
Real EstateHigh
GoldLow Moderate
PPFNo Risk
Bank Fixed DepositLow
Debt FundsLow- High
RBI Taxable FundsNo Risk
NPSLow-High
Senior Citizens Saving SchemeNo Risk

What is monthly income scheme?

The Monthly Income Scheme is a scheme of the Indian postal service. This scheme ensures for the investor a guaranteed return at 8.5% per year in the form of monthly income. Old time investors believe that MIS is the smartest option for parking funds.

What is PMVVY scheme?

This is government subsidised pension scheme. Purchase Price is the amount invested towards the scheme. PMVVY was initiated in mid-2017, and initially stood for availability for one year from the launch. The period of sale for this scheme has also been extended up to 31st March, 2020.

What is SCSS scheme?

The Senior Citizens Savings Scheme (SCSS) is a scheme meant primarily for senior citizens with the promise of a regular income. This is a risk-free option for saving tax.

What are the best investments for retirement in India?

The top investment options are:

  1. National Pension System
  2. Public Provident Fund
  3. Atal Pension Yojana
  4. Employees Provident Fund
  5. Mutual funds schemes

What is the deposit period of senior citizen saving scheme?

The account can be activated for an initial 5-year maturity period. The individual may extend the account further for a period of 3 years after 5 years.

What is the interest rate for senior citizen in SBI?

It ranges from 6% to 4.75%, depending upon the amount fixed for deposit.

What is investment limit for Pradhan Mantri Vaya Vandana Yojana?

As a social security booster for senior citizens, the investment ceiling is INR 15 lakhs.

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