Launched in 2017, Pradhan Mantri Vaya Vandana Yojana (PMVVY) is a two-in-one pension and insurance scheme for investors above 60 years of age. PMVVY aims to provide social security to senior citizens post-retirement. It is a safe investment as it is managed by the Life Insurance Corporation of India (LIC) and is backed by sovereign guarantee.
The scheme assures pension for 10 years and is paid on a monthly, quarterly, half-yearly, or yearly basis. This policy is a great tool for financial planning for senior citizens as it offers a fixed sustainable revenue.
The pension payment that an individual receives is the interest income on the premium paid at the time of purchase of the policy referred to as the “purchase price”. This rate of pension is revised every financial year by the Ministry of Finance. The minimum purchase price to buy the policy is ₹ 1.5 lakh and the upper limit for the purchase price has been set at ₹ 15 lakh.
Due to the complex calculation process and interest income limit, the beneficiary can choose either the desired amount of pension to be received or the purchase price for which he/she wishes to buy the policy. After this, the other component is calculated automatically. This facilitates hassle-free planning.
On maturity, i.e. after completion of 10 years, the individual is entitled to receive the purchase price as a lump sum along with the last payout. Alternatively, premature withdrawal is allowed in the scheme only under extreme conditions such as a medical emergency. Under such circumstances, 98% of the purchase price (called surrender value) can be withdrawn.
How to subscribe to PMVVY?
Any senior citizen who wants to subscribe to PMVVY can do so till March 2023 by visiting the nearest LIC branch, filling the application form, and submitting it with the required documents (Aadhaar, proof of address, etc.) for verification. Similarly, the process can also be completed online by visiting the LIC website, filling the online application form, and submitting documents for proof.
If the subscriber changes his/her mind after purchasing the policy, he/she is allowed to cancel the subscription within a certain time frame known as the “free lock-in period” (30 days for online purchase and 15 days for offline purchase).
Pradhan Mantri Vaya Vandana Yojana provides a unique investment and insurance opportunity to senior citizens. It is a safe and viable option for investment. However, readers are suggested to complete their checks and weigh other options against their financial goals before investing.