#NewsBytesExplainer: What is LIC's new pension scheme for senior citizens
What's the story
The registration for Pradhan Mantri Vaya Vandana Yojana (PMVVY) the prestigious pension scheme by Life Insurance Corporation (LIC) is still on for a few months. The scheme provides attractive returns for those 60 and older, who can purchase the plan for a lump payment of up to Rs. 15 lakh and then provides a fixed pension for 10 years. Here's more about PMVVY.
Context
Why does this story matter?
Pension programs such as PMVVY enable older persons in India to earn attractive returns while also ensuring optimum security in old age. Because there is no social security in India, it is even more important to have a pension plan in place to cover any future exigencies. After retirement, it also increases resistance power for people in absence of running income.
Details
No upper age restriction in the scheme
The PMVVY plan, according to the LIC website, is offered to aged Indians who are 60 years (completed) or older, with no higher age restriction. The first pension payment will be made one month, three months, six months, or a year following the purchase date. The pension mechanism might also be chosen by the subscriber while pensions, death benefits, and maturity are included.
Benefits
Interest rate will be 7.40%, payable monthly
The pension in arrears will be paid if the pensioner lives the 10-year insurance period. However, in the event of death, the purchase price will be reimbursed to the beneficiary. If the pensioner lives to the 10-year term, the purchase amount and final pension payment are payable. For plans acquired until March 31, 2023, the annual interest rate will be 7.40%, payable monthly.
Pension amount
Pension amount ranging from Rs. 1,000 to Rs. 9,250
The PMVVY provides for a monthly pension ranging from Rs. 1,000 to Rs. 9,250. The scheme's minimum purchase price for monthly, quarterly, half-yearly, and annual pensions is Rs. 1,62,162, Rs. 1,61,074, Rs. 1,59,574, and Rs. 1,56,658, respectively. The highest purchase price for monthly pensions under the program is Rs. 15 lakh, Rs. 14,89,933 for quarterly pensions, Rs. 14,76,064 (half-yearly), and Rs. 14,49,086 (annual).
Information
Policy under the scheme can be surrendered
As per the LIC, a policy taken under this scheme can be surrendered anytime during the term of the scheme under exceptional circumstances like the Pensioner requiring money for the treatment of any critical/terminal illness of self or spouse. It said the surrender value payable under this scheme shall be 98 percent of the purchase price.