Pradhan Mantri Vaya Vandana Yojana : Civil Services Mentor Magazine: FEBRUARY - 2018

::Pradhan Mantri Vaya Vandana Yojana::

Government has launched the ‘Pradhan Mantri Vaya Vandana Yojana (PMVVY)’ to provide social security during old age and to protect elderly persons aged 60 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 scheme provides an assured return of 8% per annum for 10 years. The differential return, i.e. the difference between return generated by LIC and the assured return of 8% per annum would be borne by Government of India as subsidy on an annual basis. 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. Minimum purchase price under the scheme is Rs.1,50,000/- for a minimum pension of Rs. 1,000/- per month and the maximum purchase price is Rs.7,50,000/- for a maximum pension of Rs.5,000/- per month. The scheme is exempted from Goods and Services Tax (GST). The scheme is open for subscription till 3rd May 2018.
Senior Citizens Savings Scheme, 2014 is a deposit scheme for individuals who have attained the age of 60 years. However, persons retiring on superannuation or under any Voluntary Retirement Scheme (VRS) who have attained the age of 55 years and retiring defense personnel who have attained the age of 50 years can also open the account subject to certain conditions. The upper limit of investment under this Scheme is rupees fifteen lakh. The rate of interest under the scheme for the quarter 01.01.2018 to 31.03.2018 is 8.3%. The deposits made in the scheme are exempt from income tax under section 80C of Income Tax Act, 1961. However, the interest earned on the deposit is not exempt from income tax. Provisions of Tax Deduction at Source (TDS) are applicable to the Scheme.

Some of the important aspects of this scheme are given below:

Benefits :

Pension Payment : On survival of the Pensioner during the policy term of 10 years, pension in arrears (at the end of each period as per mode chosen) shall be payable.

Death Benefit: On death of the Pensioner during the policy term of 10 years, the Purchase Price shall be refunded to beneficiary.

Maturity Benefit: 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.

Eligibility Conditions and Other Restrictions:

Minimum Entry Age: 60 years (completed)
Maximum Entry Age: No limit
Policy Term : 10 years
Minimum Pension: Rs. 1,000/- per month
Rs. 3,000/- per quarter
Rs.6,000/- per half-year
Rs.12,000/- per year
Maximum Pension: Rs. 5,000/- per month
Rs. 15,000/- per quarter
Rs. 30,000/- per half-year
Rs. 60,000/- per year

Ceiling of maximum pension is for a family as a whole i.e. total amount of pension under all the policies allowed to a family under this plan shall not exceed the maximum pension limit. The family for this purpose will comprise of pensioner, his/her spouse and dependents.

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Payment of Purchase Price:

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.

The minimum and maximum Purchase Price under different modes of pension will be as under:

Maximum Purchase Price

Mode of Pension	Minimum Purchase Price
Yearly	Rs. 1,44,578/-	Rs. 7,22,892/-
Half-yearly	Rs. 1,47,601/-	Rs. 7,38,007/-
Quarterly	Rs. 1,49,068/-	Rs. 7,45,342/-
Monthly	Rs. 1,50,000/-	Rs. 7,50,000/-

The Purchase Price to be charged shall be rounded to nearest rupee.

Mode of pension payment:

The modes of pension payment are monthly, quarterly, half-yearly & yearly. The pension payment shall be through NEFT or Aadhaar Enabled Payment System.

The first instalment of pension shall be paid after 1 year, 6 months, 3 months or 1 month from the date of purchase of the same depending on the mode of pension payment i.e. yearly, half-yearly, quarterly or monthly respectively.

Sample Pension rates per Rs.1000/- Purchase Price

The pension rates for Rs.1000/- Purchase Price for different modes of pension payments are as below:
Yearly: Rs. 83.00 p.a.
Half-yearly: Rs. 81.30 p.a.
Quarterly: Rs. 80.50 p.a.
Monthly: Rs. 80.00 p.a.
The pension instalment shall be rounded off to the nearest rupee.
These rates are age independent.

Surrender Value:

The scheme allows premature exit during the policy term under exceptional circumstances like the Pensioner requiring money for the treatment of any critical/terminal illness of self or spouse. The Surrender Value payable in such cases shall be 98% of Purchase Price.

Loan:

Loan facility is available after completion of 3 policy years. The maximum loan that can be granted shall be 75% of the Purchase Price.

The rate of interest to be charged for loan amount shall be determined at periodic intervals. For the loan sanctioned in Financial Year 2016-17, the applicable interest rate is 10% p.a. payable half-yearly for the entire term of the loan.

Loan interest will be recovered from pension amount payable under the policy. The Loan interest will accrue as per the frequency of pension payment under the policy and it will be due on the due date of pension. However, the loan outstanding shall be recovered from the claim proceeds at the time of exit.

Taxes:

Statutory Taxes, if any, imposed on this Plan by the Government of India or any other constitutional tax Authority of India shall be as per the Tax laws and the rate of tax as applicable from time to time. The amount of tax paid shall not be considered for the calculation of benefits payable under the plan.

Free Look period:

If a policyholder is not satisfied with the “Terms and Conditions” of the policy, he/she may return 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 reason of objections.
The amount to be refunded within free look period shall be the Purchase Price deposited by the policyholder after deducting the charges for Stamp duty and pension paid, if any.