Pradhan Mantri Vaya Vandana Yojana (2020 Modified) is a simplified pension plan subsidized by the Government of India through LIC. The LIC Pradhan Mantri Vaya Vandana Yojana comes with a modified pension rate and is available for sale till 31st March 2023. These rates may be updated by the Finance Ministry at the start of each year. For the year 2022-23, the assured rate of monthly pension will be 7.4% per annum.Read more
This pension scheme was introduced for senior citizens after the success of a similar scheme called the LIC Varishtha Pension Bima Yojana. LIC is solely responsible for the sale of these schemes.
Only people aged 60 years or above are eligible to invest in this scheme.
The latest LIC Pradhan Mantri Vaya Vandana Yojana interest rate for 2022 is 7.40% per annum. The pension rate remained the same in 2020-21 and 2021-22 as well.
There is a cap on the minimum and maximum pension amount and purchase price as per the mode of payment chosen by the pensioner (see Eligibility Conditions).
The purchase price has to be paid in a lump sum.
LIC offers a refund of the purchase price if the pensioner finds the scheme unsatisfactory and returns it within the free look period.
It comes packed with the following benefits for senior citizens:
The assured pension amount shall be paid out regularly as per the interval chosen by the pensioner. If you want a monthly pension, LIC will pay out a fixed pension amount at the defined rate every month for 10 years (unless you die during this period).
If you die within the policy term of 10 years, LIC will return the purchase price paid by you to the assigned nominee.
If the insured individual survives to the very end of the policy tenure of 10 years, the purchase price, including the final pension installment, will be paid by LIC.
This benefit can be availed under exceptional events like the assured life requiring money for the treatments of any critical/terminal illness of self or spouse. In such cases, LIC will pay you an S.V (Surrender Value), which is around 98% of the original Purchase Price.
If you find yourself in urgent need of capital during the policy tenure, you can request LIC for a loan against the policy benefits. The loan facility can be availed after the completion of 3 policy years and is subject to a maximum loan of 75% of the Purchase Price.
The Pradhan Mantri Vaya Vandana Yojana interest rate 2021 on loans availed till 30th April 2021 is 9.5% p.a.
One can avail of the income tax benefits on premiums under Section 80C and on the death & maturity benefits under Section 10(10D) of the Income Tax Act of 1969.
* Tax benefits are subjected to certain changes in the tax laws
Certain parameters have to be met to enjoy the benefits of this pension plan for senior citizens.
|Entry Age (completed)||60 years||No limit|
|Policy Term||10 years (fixed)|
|Mode of Purchase Price Payment||One-time lump sum payment|
|Purchase Price||Monthly: Rs.1,62,162
Yearly: Rs. 63,960
|Mode of Pension Payment||Monthly, quarterly, half-yearly, or yearly|
|Pension Amount||Monthly: Rs. 1,000
Quarterly: Rs. 3,000
Half-yearly: Rs. 6,000
Yearly: Rs. 12,000
Let’s assume that you are a 60-year-old male at the time of purchasing the policy. You pay a purchase price of Rs.10 lakhs in the scheme. You want to secure a monthly pension for 10 years. The annual pension rate of 7.40% p.a will be divided into 12 payments for every month in a year.
Here are the benefits you will be entitled to under the following circumstances -
Your monthly pension will amount to Rs (10,00,000 x 7.40%)/12 = Rs.6,167 payable across 10 years.
You will be entitled to a monthly pension of Rs.6,167 for the first 5 policy years.
Your family will get the Rs.10 lakhs that you had invested in the scheme.
A monthly pension worth Rs.6,167 will be credited to your account throughout the tenure of 10 years.
The purchase price of Rs.10 lakhs will be returned to you after completing 10 years.
You can use the Pradhan Mantri Vaya Vandana Yojana Calculator to calculate the pension amount against the purchase price.
One is advised to keep the mentioned documents ready to buy Pradhan Mantri Vaya Vandana Yojana:
Identification purposes: Passport, Aadhar card, Birth certificate, driving license, Voter ID card, Ration card, etc.
For address verification: Above mentioned documents, Gas bill, Electricity bill, maintenance bill, etc.
Income tax statements, Bank statements, photographs, Credit scores, etc., may also be needed.
It covers all deaths irrespective of whether it is natural or resulting from suicide, accidents, etc. The purchase price shall be returned in full if it occurs within the policy term.
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