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July 21, 2017

Highlights of Pradhan Mantri Vaya Vandana Yojana (PMVVY)

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The Union Finance Minister Arun Jaitley today launched the much awaited 8% Pension scheme "Pradhan Mantri Vaya Vandana Yojana (PMVVY)". PMVVY is a Pension Scheme announced by the Government of India exclusively for the senior citizens aged 60 years and above which is available from 4th May, 2017 to 3rd May, 2018. The Scheme can be purchased offline as well as online through Life Insurance Corporation (LIC) of India which has been given the sole privilege to operate this Scheme.

Here are some important Points you should know about this Scheme

  • Under this scheme, there will be an assured return of 8 per cent p.a. payable monthly (equivalent to 8.30% p.a. effective) for 10 years.
  • If there is a shortfall between the actual return earned under the scheme and the guaranteed return of 8 per cent then the government will subsidise LIC for it.
  • LIC started offering the pension scheme since May 4,2017 and it will remain open for the next one year.
  • Loan upto 75% of Purchase Price shall be allowed after 3 policy years (to meet the liquidity needs). Loan interest shall be recovered from the pension installments and loan to be recovered from claim proceeds.
  • The scheme also allows for premature exit for the treatment of any critical/ terminal illness of self or spouse. On such premature exit, 98% of the Purchase Price shall be refunded.
  • Pension is payable at the end of each period, during the policy term of 10 years, as per the frequency of monthly/ quarterly/ half-yearly/ yearly as chosen by the pensioner at the time of purchase.
  • On survival of the pensioner to the end of the policy term of 10 years, Purchase price along with final pension installment shall be payable.
  • On death of the pensioner during the policy term of 10 years, the Purchase Price shall be paid to the beneficiary. 
  • The ceiling of maximum pension is for a family as a whole, the family will comprise of pensioner, his/her spouse and dependants.
  • The scheme is exempted from Service Tax/ GST.
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