Pradhan Mantri Vaya Vandana Yojana: Pension, Death & Maturity Benefit Explained

The Pradhan Mantri Vaya Vandana Yojana (PMVVY) is a pension initiative initiated by the Indian government that is managed and processed by the Life Insurance Corporation of India (LIC) solely for elderly persons aged 60 years old or above. This plan is currently available for purchase until March 31, 2023. According to LIC, the assured rates of pension for plans sold throughout the year would be evaluated and approved by the Ministry of Finance, Government of India, at the commencement of each year. The Scheme will offer a guaranteed pension of 7.40 percent p.a. payable monthly for the first fiscal year, i.e. up to March 31, 2022. This plan can be subscribed to both offline and online by visiting the LIC's official website. As we're on the subject of PMVVY, let's take a quick look at its features and benefits.

Benefits of PMVVY

Here are the features and benefits of PMVVY which senior citizens can get by applying for it.

Eligibility and policy term: This plan comes with a maturity period of 10 years and individuals with a minimum age of 60 years (completed) with no upper age bar can apply for the scheme.

Pension payment: If the pensioner survives during the policy duration of ten years, he or she will be entitled to a pension in arrears at the completion of each period, according to the mode specified.

Death benefit: The purchase price will be reimbursed to the beneficiary or heir if the pensioner dies during the policy period of ten years.

Maturity benefit: If the pensioner survives to the completion of the policy period of ten years the purchase price, together with the final pension installment, will be payable to him or her respectively.

Premature exit: A pensioner can make a premature exit or withdrawal during the term of the policy in exceptional situations i.e. funding for the serious illness of him or his spouse. In such circumstances, the surrender value payable shall be 98 percent of the purchase price made by the pensioner.

Loan facility: A pensioner under the scheme can also apply for a loan only after the completion of 3 years of the policy term. Upon successful loan application, he or she would get a maximum loan amount of 75% of the purchase price. The interest rate levied on the loan amount is calculated periodically and will be deducted from the policy's pension amount. The effective interest rate shall be determined using the IRDAI-approved procedure.

Taxation: Apart from the GST exemption on the principal amount, PMVVY doesn't provide tax benefits to senior citizens. According to LIC, the amount of Tax (GST) paid shall not be considered for the calculation of benefits payable under the plan.

Freelook period: If a subscriber is uncomfortable with the policy's "Terms and Conditions," he or she can surrender the product to the corporation within 15 days if purchased offline and 30 days if purchased online of acquisition, explaining the rationale for the concerns. After deducting the charges for Stamp duty and pension paid, if any, the refund amount or the purchase price provided by the policyholder would be refunded to him or her within the free look period.

Mode of pension payment: Pension payments are made monthly, quarterly, semi-annually, and annually. Pension payments would be made via NEFT or the Aadhaar Enabled Payment System. The initial or first installment of pension shall be paid after one year, six months, three months, or one month after the purchase date, according to the manner of pension payment, i.e. yearly, half-yearly, quarterly, or monthly.

Minimum and maximum pension amount

Minimum Pension	Maximum Pension
Rs 1,000/- per month	Rs 9,250/-per month
Rs 3,000/- per quarter	Rs 27,750/-per quarter
Rs 6,000/-per half-year	Rs 55,500/-per half-year
Rs 12,000/- per year	Rs 1,11,000/-per year
Source: LIC

Payment of purchase price

The maximum amount of purchase price authorized to a senior person under all policies under this plan and all policies taken under Pradhan Mantri Vaya Vandana Yojana should not surpass Rs 15 lakhs. The scheme can be adopted with a one-time payment of the purchase price. The pensioner can select either the pension amount or the purchase price. The following are the minimum and maximum purchase prices under various types of pension:

Mode of pension	Minimum purchase price	Maximum purchase price
Yearly	Rs 1,56,658/-	Rs 14,49,086/-
Half-yearly	Rs 1,59,574/-	Rs 14,76,064/-
Quarterly	Rs 1,61,074/-	Rs 14,89,933/-
Monthly	Rs 1,62,162/-	Rs 15,00,000/-
Source: LIC

Sample pension rates

According to LIC, the pension rates for Rs 1000/- purchase price are as follows for different modes of pension payment:

Yearly:	Rs 76.60 p.a.
Half-yearly:	Rs 75.20 p.a.
Quarterly:	Rs 74.50 p.a.
Monthly:	Rs 74.00 p.a.
Source: LIC