The Union Cabinet on May 20 extended the Pradhan Mantri Vaya Vandana Yojana (PMVVY), a social security scheme for senior citizens, for three years till March, 2023.

Pradhan Mantri Vaya Vandana Yojana

Government announced the ‘Pradhan Mantri Vaya Vandana Yojana (PMVVY)’ in the Union Budget of 2017-18.

The scheme is to provide social security during old age and to protect elderly persons aged 60 years and above against a future fall in their interest income due to uncertain market conditions. 

The scheme enables old age income security for senior citizens through provision of assured pension/return linked to the subscription amount based on government guarantee to Life Insurance Corporation of India (LIC).

The assured rate of return for fiscal 2020-21 has been pegged at 7.4 per cent per annum and thereafter to be reset every year. Earlier, the scheme offered an assured return of 8 per cent.

Pension is payable at the end of each period during the policy tenure of 10 years as per the frequency of monthly/quarterly/half-yearly/yearly as chosen by the subscriber at the time of purchase.

In the 2018-19 Budget, the maximum investment limit under PMVVY was doubled to Rs 15 lakh per senior citizen.

The scheme is exempted from service tax/ GST.

On survival of the pensioner to the end of the policy term of 10 years, purchase price along with final pension installment shall be payable.

Loan upto 75 per cent of purchase price shall be allowed after three policy years (to meet the liquidity needs). Loan interest shall be recovered from the pension installments and loan to be recovered from claim proceeds.

The scheme also allows for premature exit for the treatment of any critical/ terminal illness of self or spouse. On such premature exit, 98 per cent of the purchase price shall be refunded.

On death of the pensioner during the policy term of 10 years, the purchase price shall be paid to the beneficiary.

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