The Government of India introduced the Pradhan Mantri Vaya Vandana Yojana scheme in 2017 to provide social security to elderly Indian citizens aged 60 years and above. The pension scheme, under the Ministry of Finance, is operated solely by the Life Insurance Corporation of India (LIC) on behalf of the government.
In this scheme, the policyholder deposits a lump sum amount to receive the pension either monthly, quarterly, half-yearly, or yearly for a period of 10 years from the date of purchase of a policy, for an assured interest of 7.40% per annum, the amount which is deposited monthly into the policyholders’ account.
The period of sale of Pradhan Mantri Vaya Vandana Yojana has been extended from financial year 2020-21 till March 31, 2023.
Table of Content
Pradhan Mantri Vaya Vandana Yojana at a Glance
Features and Benefits of Pradhan Mantri Vaya Vandana Yojana
Steps to Open Pradhan Mantri Vaya Vandana Yojana Account
Frequently Asked Questions (FAQs)
Pradhan Mantri Vaya Vandana Yojana at a Glance
Eligibility: 60 years and above
Max. Investment: INR 15 lakh
Rate of Interest: 7.40% p.a.
Maturity Tenor: 10 years.
Mode and Quantum of Pension Payment: Monthly, quarterly, half-yearly, or yearly.
Loan Benefits: 75% of the amount.
Fund Withdrawal Options: Upon maturity, surrender, or pensioner’s death.
Beneficiary: Pensioner, nominee, or assignee.
Taxation: Interest earned on Pradhan Mantri Vaya Vandana Yojana is taxable.
Grievance Redressal: Email: co_crmgrv@licindia.com; Toll Free: 155255 or 1800 425 4732.
Features and Benefits of Pradhan Mantri Vaya Vandana Yojana
The PM Vaya Vandana Yojana offers higher returns than even the popular fixed deposits offered by banks and non-banking financial companies in India.
If we consider the interest earned on a regular fixed deposit account in India for the current financial year, it is anywhere between 5% to 6.35% for a public sector bank on one-year deposits, while the PM Vaya Vandana Yojana is giving investors a 7.4% return per annum.
Before signing up for the scheme, key features of PM Vaya Vandana Yojana that investors should know about include:
Eligibility
Senior citizens should be of Indian origin and of age 60 years and above to purchase this policy.
Investment
Maximum investment allowed is INR 15 lakh.
Rate of Interest
For the financial year 2022-23, senior citizens can earn up to 7.4% interest, which is deposited monthly on the policyholder’s account.
Maturity Tenor
The assured rate of interest under the Pradhan Mantri Vaya Vandana Yojana is paid during the overall policy term of 10 years for purchase made till March 31, 2023.
Mode and Quantum of Pension Payment
The PM Vaya Vandana Yojana scheme allows account holders to deposit a lump sum amount with an option to choose the mode of payment for receiving the pension either monthly, quarterly, half-yearly, or yearly for a period of 10 years, from the date of purchase of a policy.
The pension amount a policyholder can earn depends on the purchase price and mode of payment chosen by the policyholder. For instance, the maximum monthly pension of INR 9,250 can be earned on a purchase price of INR 15 lakh. Similarly, the pension will be INR 1,11,000 per annum on the purchase price of INR 14,49,086. Likewise, INR 1,61,074 quarterly for the purchase of INR 14,89,933, and INR 1,59,574 half-yearly for the purchase of INR 14,76,064.
The corporation processes the payments through NEFT, or Aadhaar enabled payment system.
Related: NEFT Timing for Banks in India
Loan Benefits
Under the PM Vaya Vandana Yojana, policyholders can get up to 75% of the deposit as loan amount after completing three years from the date of purchase. As per the policy document, the applicable interest rate is 9.5% per annum for the loan sanctioned till Apr. 30, 2021.
Note: In case the policyholder surrenders or dies during the policy tenure, the corporation will deduct the outstanding loan amount as well as interest from the policy money.
Fund Withdrawal Options
Funds deposited under the PM Vaya Vandana Yojana can be withdrawn or claimed under circumstances, that follows:
- Pensioner’s death: A nominee has to submit a discharge form with an original copy of the policy document, proof of title, proof of death to the corporation within 90 days of the policyholder’s death.
- Benefit payable on surrender: The scheme allows premature exit under exceptional circumstances and emergencies. The pensioner has to submit the discharge form along with the original policy document, proof of medical treatment of self or spouse. The pensioner will receive 98% of the value of purchase.
- Benefit payable on maturity: Pensioners will receive the full purchase price along with final pension installment to end the policy after completion of 10 years term period upon submission of discharge form and the original policy document.
The corporation processes all the claim payments through NEFT, or Aadhaar-enabled payment system.
Nomination
The policyholder while opening an account, or before the maturity, can nominate a person to whom the money secured by the policy shall be paid in the event of his death. Assignees can also be elected to receive the money if the nominee is minor.
Taxation
Only the interest earned on the PM Vaya Vandana Yojana is subject to income tax deductions as per applicable rate. However, the principal deposits made in the scheme are exempt from income tax under Section 80C of Income Tax Act, 1961.
Grievance Redressal Mechanism
Customers can visit the LIC branch office or the official website of the LIC for redressal of any grievances related to their Pradhan Mantri Vaya Vandana Yojana account. Alternatively, an email can be sent to co_crmgrv@licindia.com, or call the toll free numbers – 155255 or 1800 425 4732.
Steps to Open Pradhan Mantri Vaya Vandana Yojana Account;
Visit Your Point of Account Opening
The Pradhan Mantri Vaya Vandana Yojana account can be opened at any branch office of the LIC.
The interest earned on the scheme is directly credited into the policyholders’ account on a monthly basis.
When a depositor opens the policy account via the official website of the LIC, they can fill up the self-explanatory form. Upon submission, the user will be provided with a reference ID number, the name and contact number of the agent who would be contacting you for verification and application process.
Carry Documents Required
- Submit the policy form with details
- Proof of Age: Policy is issues based on the age of the pensioner as declared in the proposal form. PAN Card, Aadhaar Card will be valid.
- Proof of Identity: Depositors’ passport size photographs.
Although the LIC has not mentioned these requirements specifically, you may carry related documents for proof of income, proof of age, proof of address, and even proof of retirement.
Submit Your Application Form
Application forms can be submitted online, or can be procured physically from the LIC branch. Applicants are advised to read the terms and conditions of the Pradhan Mantri Vaya Vandana Yojana carefully before submitting your application.
Collect Your Passbook
Once the LIC verification process is complete, policyholders are provided with a passbook, which contains information such as:
- Date of account opening
- Policy number
- The amount deposited in the account
- Details on interest you will earn on a quarterly basis
- The maturity date of the account
- Beneficiary details, etc.
Frequently Asked Questions (FAQs)
Which is better: PMVVY scheme or Senior Citizens Savings Scheme?
The interest rate of both PMVVY and Senior Citizens Savings Scheme (SCSS) are close to 8% per annum. In the latter type of pension scheme, senior citizens can earn benefit from tax exemption if the total investment for the year is below INR 1.5 lakh. The interest earned on the PMVVY scheme is subject to tax deduction at source (TDS).
