Extension for Availment of the Pradhan Mantri Vaya Vandana Yojana (PMVVY) 2020

1.    What is the Pradhan Mantri Vayo Vridha Yojana?

The Pradhan Mantri Vaya Vandana (PMVVY) is a pension scheme announced by the Government of India in the year 04.05.2017 primarily for the benefit of a senior citizen of the country who by availing the scheme earns a regular scheme.

This Scheme has been solely operated by the Life Insurance Corporation of India. The scheme can be purchased online as well as offline.

2. Who is the eligible person to avail of this scheme?

Following is the eligibility criteria for availing scheme and restriction involved-

•    Minimum Entry Age- 60 yrs.

•    Maximum Age- No upper limit

•    Minimum Pension- Rs.1000 per month/ 3000 per quarter/ 6000 half-year/ Rs. 12000 per year;

•    Maximum Pension- Rs.10000 per month/ 30000 per quarter/ 60000 per quarter/ 120000 per year

3. Restrictions –

However, the overall ceiling limit for the whole family is subject to certain restrictions. Accordingly, the total amount of pension under all the policies allowed to a family under this plan should not be more than the maximum pension limit. 

For the purposes of this scheme, the family shall mean pensioner, spouse, and dependent children.

4. How to buy the scheme?

•    The scheme can be purchased by payment of a certain amount as a Purchase Price, where the pensioner shall have the right to choose either an amount of pension or the purchase price. 

•    The first installment of the pension scheme shall be paid after 1 year, 6 months, 3 months, or 1 month from the date of purchase of the same depending upon the mode of pension payment.

5. What are the benefits included for the availment of the scheme?

Some of the paybacks include-

A.    Option to surrender for essential Needs- the PMVVY scheme allows premature exit during the policy term under the exceptional circumstances like for treatment of himself/their spouse. On surrender, the value payable in such cases shall be 98% of the purchase price.

B.    Loan- The loan facility is available after the completion of 3 policy years. The maximum loan that could be granted shall be nearly 75% of the purchase price. Also, the rate of interest chargeable for the loan availed shall be determined at the periodic intervals. Such loan interest shall be recovered from the claim proceeds at the time of exit.

C.    Free Loan Exit-  If a policyholder is not satisfied with the terms & conditions of the policy, he/she may return the policy to the corporation within 15 days(30 days if this policy is purchased online) from the date of receipt of the policy stating the reason of objections.

The amount refunded back within the free look period shall be the purchase price deposited by the policyholder after deducting the charges for the stamp duty and pension paid if any.

D.    Exclusion- There shall be no exclusion on the count of suicides and full purchase price shall be payable.

E.    Pension Payment-On the survival of the pensioner during the policy term for 10 years, pension in arrears (at the end of each period as per mode chosen) shall be payable.

F.    Death Benefit –On the death of the Pensioner during the policy term of 10 years, the Purchase price shall be refunded to the beneficiary.

G.    Maturity Benefit-On survival of the pensioner to the end of the policy term of 10 years, purchase price along with the final pension installment shall be payable.

H.    The scheme is exempted from the payment of GST.

I.    The rate of return under this scheme varies every year and the government will reset the interest rate every year.

J.    The Government of India has prescribed an annual rate of return at 7.4% for the financial year 2020-21.

6. Notification of Extension till 31.03.2023-

Earlier, in the Budget speech of 2018-19, the Government of India announced the enhancement of Pradhan Mantri Vaya Vandana Yojana to Rs.15 Lakh per senior citizen till 31st March 2020.  As the scheme is beneficial enough to turn into becoming a source of regular payments for senior citizen in the long run, the sale period for this scheme has been extended from 31.03. 2020 to 31.03.2023.

7. FAQs

Is the PMVVY scheme safe for investment?

As the Life Insurance Corporation of India has been given the authority for the administration of the scheme, the scheme is comparatively low at risk as compared to other schemes.

Can both a husband and his wife invest in the PMVVY scheme?

The scheme is subject to an overall ceiling limit of rupees fifteen lakhs for a family. The family here means the pensioner, his/her spouse, and dependent children.

Which is a better policy for senior citizens in India the SCSS vs. PMVVY?

The Senior Citizen Savings Scheme (SCSS) and the PMVVY both are two popular investment options for senior citizens in India. When it comes to the comparison of both schemes for calculation of the benefit involved, they have their own pros and cons. For earning a better interest rate, generally, the SCSS scheme has a larger rate of return but the time period of the scheme is larger( SCSS scheme is valid for 5 years and extension for 3 years) in the PMVVY scheme for 10 years and that too at a varying interest rate.

Author:

eStartIndia Team