Pradhan Mantri Vaya Vandana Yojana (PMVVY) - Revised (w.e.f. 20.05.2020)

INTRODUCTION:

Pradhanmantri Vaya Vandana Yojana (PMVVY) is a pure pension scheme for senior citizen aged 60 years and above.  This scheme was initially announced in budget for 2017-2018 by Government of India. This scheme was rolled out through LIC of India on 04^th May 2017 to 03^rd May 2018 but the scheme was further extended till 31.03.2020 in Union Budget for 2018-2019. Earlier till 31^st March 2020, this scheme used to offer 8% annual return. Now this scheme has been extended till 31^st March 2023 but with reduced interest at 7.4% p.a.

MODIFIED PMVVY:

On 20^th May 2020, in a press release, Union Cabinet approved the extension of existing PMVVY till 31^st March 2023. Now we shall discuss the salient features of this scheme taking into consideration of said press release:

• As already mentioned this scheme offers interest at 7.40% per annum for the year 2020-21
• The interest will be reset annually w.e.f. 1^st April of each financial year  and will be in line with the prevailing revised rate of returns of Senior Citizens Saving Scheme (SCSS)
• Term of the scheme is 10 years
• Pension is payable at the end of each frequency i.e. monthly/ quarterly/ half-yearly/ yearly as chosen by the senior citizen at the time of purchase
• The scheme is exempted from GST
• The scheme does not provide any deduction u/s 80C of IT Act
• Interest/Income/pension under this scheme is subject to Income Tax as per applicable slab
• At the end of the policy term of 10 years, full Purchase price along with final pension installment will be paid
• We can take loan upto 75% of Purchase Price after expiry of 3 years of policy
  
• In case of loan against this scheme, loan interest will be deducted from the pension first and rest amount will be paid as pension
• Purchase price will also be paid after deducting the loan principal amount
• Pre-mature exit can also be made but for the treatment of any critical/ terminal illness of self or spouse
• On such premature exit, 2% penalty will be deducted and 98% of the Purchase Price will be paid
• In case of death of pensioner/policy holder during the policy term, the purchase price shall be paid in full to the nominee/beneficiary and the scheme will be closed
• Both Husband and Wife can invest in the scheme subject to their age being 60 years or above
• A free look period of 15 days is available in case of policy is purchased through agent and if the policy is purchased online this free look period will be 30 days.

MINIMUM AND MAXIMUM AGE:

Minimum: 60 years

Maximum: No Limit

MINIMUM AND MAXIMUM PENSION:

Frequency	Minimum (₹)	Maximum (₹)
Monthly	1000	9250
Quarterly	3000	27250
Half Yearly	6000	55500
Yearly	12000	111000

 MINIMUM AND MAXIMUM PURCHASE PRICE:

Frequency	Minimum (₹)	Maximum (₹)
Monthly	162162	1500000
Quarterly	161074	1489933
Half Yearly	159574	147064
Yearly	156658	1449086

 Reference: LIC of India scheme document