Pradhan Mantri Vaya Vandana Yojana

PMVVY stands for Pradhan Mantri Vaya Vandana Yojana, which is a government-backed pension scheme launched by the Government of India in 2017. The scheme is specially designed for senior citizens aged 60 years and above, and it provides them with a regular and stable income during their retirement years.

PMVVY is implemented through the Life Insurance Corporation (LIC) of India and is available for purchase until March 31, 2023. The scheme has a tenure of 10 years, and the pension income is guaranteed for the entire tenure.

Under the PMVVY scheme, senior citizens can invest a lump sum amount and receive a fixed rate of interest on the investment, which is paid out in the form of regular pension payments. The scheme offers an attractive interest rate of 7.4% per annum for the financial year 2021-22.

The minimum investment amount under the PMVVY scheme is Rs. 1.5 lakh, and the maximum investment amount is Rs. 15 lakhs. The pension payment is made monthly, quarterly, half-yearly, or annually, as per the preference of the investor.

The PMVVY scheme is an excellent investment option for senior citizens who are looking for a regular and stable income source during their retirement years. The scheme offers attractive interest rates and guarantees a fixed pension income for the entire tenure. Additionally, the scheme also provides a loan facility up to 75% of the invested amount after three years from the date of purchase.

Returns Calculation of PMVVY

Under the Pradhan Mantri Vaya Vandana Yojana (PMVVY) scheme, the pension payments can be made on a monthly, quarterly, half-yearly or annual basis, as per the preference of the investor. Here’s a table that shows the annual returns and pension payments for various investment amounts under the PMVVY scheme for different payout frequencies:

Investment AmountMonthly PensionQuarterly PensionHalf-Yearly PensionAnnual PensionAnnual Return on Investment
Rs. 1.5 lakhsRs. 1,083Rs. 3,262Rs. 6,408Rs. 11,0707.4%
Rs. 2 lakhsRs. 1,448Rs. 4,355Rs. 8,544Rs. 14,7607.4%
Rs. 5 lakhsRs. 3,620Rs. 10,885Rs. 21,360Rs. 36,9007.4%
Rs. 10 lakhsRs. 7,240Rs. 21,770Rs. 42,720Rs. 73,8007.4%
Rs. 15 lakhsRs. 10,860Rs. 32,655Rs. 64,080Rs. 1,10,7007.4%

Please note that the pension payments and returns may vary based on the payout frequency and the prevailing market conditions. Additionally, the PMVVY scheme has a lock-in period of 10 years, and premature withdrawals are not allowed. Therefore, it’s essential to consider your financial goals and retirement planning needs before investing in the scheme. It’s also advisable to consult a financial advisor to understand the risks and returns associated with the investment.

DIfference between SCSS and PMVVY

The Senior Citizens’ Savings Scheme (SCSS) and the Pradhan Mantri Vaya Vandana Yojana (PMVVY) are two investment schemes that are specifically designed for senior citizens in India. Here are some of the key differences between the two schemes:

  1. Eligibility: The SCSS is open to all senior citizens above the age of 60 years, while the PMVVY is open to senior citizens above the age of 60 years or those above 55 years who have retired on superannuation or under a voluntary or special voluntary retirement scheme.
  2. Investment limit: The maximum investment limit under the SCSS is Rs. 15 lakhs, while the maximum investment limit under the PMVVY is Rs. 15 lakhs as well.
  3. Interest rate: The interest rate under the SCSS is revised quarterly by the government and currently stands at 7.4% per annum (as of January 2022), while the interest rate under the PMVVY is fixed at 7.4% per annum.
  4. Investment tenure: The investment tenure under the SCSS is 5 years, which can be extended for another 3 years, while the investment tenure under the PMVVY is 10 years.
  5. Premature withdrawal: Premature withdrawal is allowed under the SCSS, subject to certain conditions and penalty charges. However, premature withdrawal is not allowed under the PMVVY, except in case of the death of the investor or the spouse.
  6. Payout frequency: The interest under the SCSS is paid out quarterly, while the pension payments under the PMVVY can be made on a monthly, quarterly, half-yearly or annual basis.
  7. Taxation: The interest earned under the SCSS is taxable as per the income tax laws, while the interest and pension payments under the PMVVY are taxable as per the income tax laws.

Documents required for PMVVY

To invest in PMVVY, you will need to submit the following documents along with the PMVVY proposal form:

  1. Age proof: You will need to submit a copy of your age proof document, such as Aadhaar card, PAN card, passport, voter ID, etc.
  2. Identity proof: You will need to submit a copy of your identity proof document, such as Aadhaar card, PAN card, passport, voter ID, driving license, etc.
  3. Address proof: You will need to submit a copy of your address proof document, such as Aadhaar card, passport, driving license, utility bills, bank statement, etc.
  4. Photograph: You will need to affix a recent passport-size photograph on the PMVVY proposal form and also submit an additional photograph for record purposes.
  5. Bank details: You will need to provide your bank account details, such as bank name, branch name, account number, IFSC code, etc., for receiving the pension payments.

It’s important to note that the specific documents required may vary depending on the requirements of the designated branch or the policyholder’s personal circumstances. It’s advisable to check with the LIC branch or the website for the exact document requirements before submitting your application.

LIC Agent’s commission on PMVVY

The commission paid to LIC agents on the purchase of PMVVY depends on the premium amount and the policy term chosen by the investor. The commission rates are fixed by the Insurance Regulatory and Development Authority of India (IRDAI) and are subject to change from time to time.

As per the current commission structure, LIC agents receive a commission of 2.50% of the premium paid for policies with a policy term of 10 years and 1.50% for policies with a policy term of 5 years. This commission is paid by LIC and is deducted from the premium amount paid by the investor.

It’s important to note that the commission paid to agents is not an additional cost to the investor and is already included in the premium paid. The investor does not have to pay any extra charges or fees for the services of the agent.

FAQs

  1. What is the eligibility criteria for PMVVY?
    • The PMVVY is open to senior citizens above the age of 60 years or those above 55 years who have retired on superannuation or under a voluntary or special voluntary retirement scheme.
  2. What is the maximum investment limit under PMVVY?
    • The maximum investment limit under the PMVVY is Rs. 15 lakhs.
  3. What is the interest rate under PMVVY?
    • The interest rate under the PMVVY is fixed at 7.4% per annum (as of January 2022).
  4. What is the investment tenure under PMVVY?
    • The investment tenure under the PMVVY is 10 years.
  5. What are the payout options under PMVVY?
    • The pension payments under the PMVVY can be made on a monthly, quarterly, half-yearly or annual basis.
  6. What is the process for investing in PMVVY?
    • Investors can invest in PMVVY through designated branches of Life Insurance Corporation (LIC) of India or through its online portal.
  7. Is premature withdrawal allowed under PMVVY?
    • Premature withdrawal is not allowed under the PMVVY, except in case of the death of the investor or the spouse.
  8. What are the tax implications of investing in PMVVY?
    • The interest and pension payments under the PMVVY are taxable as per the income tax laws.
  9. Is there any loan facility available under PMVVY?
    • Yes, loan facility is available under PMVVY after completion of 3 years from the commencement of the policy.
  10. What happens to the investment and payouts under PMVVY in case of the death of the investor or the spouse?
  • In case of the death of the investor or the spouse, the purchase price (i.e., the amount invested) is refunded to the nominee or legal heir, as applicable. No surrender penalty is applicable in such cases.
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