Life Insurance Corporation of India (LIC) has launched the revamped Pradhan Mantri Vaya Vandana Yojana (PMVVY) for senior citizen with better rate of interest.
This pension scheme is non-linked and non-participating, and will be available for investors till March 31, 2023. Financial advisors say that investors should look at this scheme as it offers attractive returns for longer duration.
According to LIC, this scheme has a policy term of 10 years and the pensioner can choose monthly, quarterly, half yearly or yearly mode of pension. The scheme will provide an assured rate of return of 7.40% per annum in FY21. For investors investing this financial year will get 7.40% per annum payable monthly for entire duration of ten years.
“For the policies sold during the next two financial years, the applicable assured rate of interest, at which the pension payment shall be made, will be reviewed and decided at the beginning of each financial year by the finance ministry,” said LIC in its release.
The scheme can be purchased by payment of a lump sum purchase price. The pensioner has an option to choose either the amount of pension or the purchase price. For example, the minimum purchase price for monthly mode is Rs 1,62,162 and for yearly mode Rs 1,56,658. The maximum pension one can get under this scheme will be Rs 9,250 per month and Rs 1,11,000 per year.
While the Senior Citizen Saving Scheme (SCSS) has a tenor of five years and can be extended for another three years, PMVVY has a policy term for 10 years and gives 7.4% per annum. For an investor who wants income certainty for ten years, this is a very good product.”
Total amount of purchase price under all the policies under this plan and all the policies taken under earlier versions of PMVVY allowed to a senior citizen shall not exceed Rs 15 lakh, said LIC. This scheme was earlier launched in 2017, and recently, the government extended the scheme till March 31, 2023.
This scheme can be purchased offline as well as online from LIC. Financial planners say that since pension received are taxed at the hand of investors, this product from LIC is advisable for someone who is in a lower tax bracket.
