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Social security Scheme for senior citizens: Pradhan Mantri Vaya Vandana Yojana

The Government of India has recently launched a very good pension scheme for the senior citizens of the country. The scheme is known as Pradhan Mantri Vaya Vandana Yojana (PMVVY) and it provides an opportunity for regular income to the senior citizens during their sunset years. Know the salient features of this new scheme.

Government of India has brought innumerable welfare schemes for common people. Some of the schemes are very successful, some are moderately successful and some schemes are failures. However, the failure of some schemes is not because of the defect of such schemes, but due to lack of awareness of people for whom such schemes were brought.

Recently Government of India has been putting of lot of stress on the welfare of the increasing number of senior citizens in the country. When the longevity of people has increased thanks to advancement in medical technology and treatment, the quality of life has been not up to the mark, due to various factors like increasing inflation, increasing cost of living and lack of regular income for the senior citizens. To address the issue of quality of life of the senior citizens, the Government has launched Pradhan Mantri Vaya Vandana Yojana (PMVVY). Let us know the salient features of this Yojana and try to avail the benefits of PMVVY for our near and dear elderly members of our family.

What is PMVVY?

Pradhan Mantri Vaya Vandana Yojana (PMVVY) is a pension scheme announced by the Central Government. PMVVY is exclusively for the senior citizens aged 60 years and above. This Yojna is available from 4th May, 2017 to 31st March, 2020. PMVVY is offered by the LIC of India. Financial experts believe that in the present regime of falling interest rate, this pension scheme will provide the senior citizens a regular income during their sunset years.

Salient features of PMVVY at a glance

  • There will be an assured return of 8% per annum under the pension scheme. In case of shortfall, Government will subsidize LIC.
  • The senior citizen investors can invest in the scheme both in online and offline mode.
  • Under PMVVY, the investors can exercise an option to choose the periodicity of the payment, i.e, they will themselves decide whether they would payment monthly, quarterly, half-yearly or annually.
  • The minimum pension under the scheme is Rs. 1000/- per month, for which an investor has to deposit Rs. 1.5 lakh. There is no maximum limit under PMVVY
  • The lock-in period is ten years. After expiry of lock-in period, the investor will get back the money with the final instalment of the pension.
  • Premature withdrawal under PMVVY is allowed. But in case of premature withdrawal, 98% of the invested amount will be returned.
  • In case of the death of the investor/pensioner within ten years, the entire invested amount will be returned to the nominee.
  • There is a provision of availing a loan of up to 75% of the invested amount under the PMVVY by the investor.

Final few words

The interested senior citizens must remember that investment in this pension scheme will be discontinued after 31st March, 2020. So, they should subscribe to this useful scheme at the earliest. Considering the features of the scheme, the financial advisors are asking the senior citizens to go for the scheme to get regular income after their retirement/earning days. For having further details about PMVVY, the investors may visit the website of LIC or visit the nearest branch. Generally, LIC agents are not aware of this new scheme.

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Author: Neeru Bhatt09 Jun 2018 Member Level: Diamond   Points : 2

In view of the bank deposits rates gone down considerably, the seniors are in a fix as where to park their retirement funds.

In this context the interest rate of 8% in this scheme is a good option though it is only a bit higher from the bank/ post office where the interest rates are 7 to 7.5%.

Today if we see the inflation rate, the fund corpus of a senior citizen is dwindling fast. So what is required is a mechanism to compensate this downfall. One possible investment option is go for a mix of mutual funds - some part of the investible funds in equity types while some in debt instruments. With this approach there may be a better return as compared to PMVVY scheme.

Author: Partha K.09 Jun 2018 Member Level: Diamond   Points : 2

Thanks for reading this article and for the comments. Very few people have a good understanding of mutual funds. Most of the elderly people don't like to track the market, bond funds, interest rate movement and various ratios. They want a regular income after retirement/earning days. For them, this new pension scheme is excellent, because it would return the money after completion of ten years. Their nominee will get the entire invested amount and they can also get a loan from the invested amount.

I have written this article to let people know about this new scheme which will remain in the market only upto 31st March, 2020.

Author: Umesh10 Jun 2018 Member Level: Diamond   Points : 4

In today's scenario this scheme appears a good investment option as the return is better than bank FDs. Senior citizens can take advantage of this scheme. The author has explained the things in nutshell.

I have one point to make regarding this scheme vis-a-vis bank FD. This scheme is for a tenure of 10 years and there is no way to channel it to other avenues during the tenure. So the money is locked. While in bank deposit if due to change in economic and political conditions, the interest rates increase to 9-10% during next 2-3 years then one can convert the earlier FDs to these new rates by pre-closing the FDs by paying a small preclosure fee. So maneuverability is more in case of bank FDs.

However, if bank rates further dip down in future then the present scheme PMVVY will be the winner.

Author: Partha K.11 Jun 2018 Member Level: Diamond   Points : 1

Mr. Umesh: Thanks for reading the article. In PMVVY, there is also a provision of pre-mature withdrawal (please refer to the sixth bullet-point of the Salient Features). 98% of the invested amount can be withdrawn anytime after joining the pension scheme.

Author: DR.N.V. Srinivasa Rao11 Jun 2018 Member Level: Platinum   Points : 3

I feel it is a good scheme for a senior citizen to get some fixed income every month. Unlike other policies of LIC, the minimum age for entering into the scheme is 60 years and no maximum age is prescribed.
If the policyholder is not satisfied with the “Terms and Conditions” of the policy, he can submit 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 objections and reasons for surrendering the policy. The purchase price will be paid back to the policyholder in such case deducting the stamp duty charges and if any pension paid before that date.
A good article with useful information

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