LIC Varishtha Pension Bima Yojana for Senior Citizens
Central Government has re-launched Varishtha Pension Bima Yojana (administered by LIC) on this independence day 15th August, 2014 for Senior Citizens. Varishtha Pension Bima Yojana provides 9% assured returns which are payable per month by way of pension. How good is Varishtha Pension Bima Yojana? What are the positives and negative about this Central Government Varishta Pension plan?
Also Read: How is HDFC Guaranteed pension plan scheme?
Features of Varishtha Pension Bima Yojana
- Scheme opens between 15th August, 2014 to 14th August, 2015 (1 year period)
- Minimum age : 60 years
- Single premium payable between Rs 66,665 to Rs 6,66,665
- Pension amount of Rs 500 to Rs 5,000 depending on the single premium paid.
- Assured return of 9% per annum, which is payable per month. Annualised yield works out to be 9.38%. This pension is payable for the lifetime of the individual.
- One can exit from this option after 15 years
- A pension can be received every month, quarterly, half yearly and yearly
- The nominee gets invested amount back in case of death of the pensioner during.
Positives of Varishtha Pension Bima Yojana
- 9% assured returns per annum, payable every month. Yield works out to be 9.38% per annum.
- Pension plan from Central Government, hence zero risk investment option.
- Good for low income earned weaker section people who would have got low retirement corpus.
- Policy administered by LIC. Their expertise would help in the smooth running of the plan.
Negatives of Varishtha Pension Bima Yojana
- Investment cannot be closed before 15 years. In case you need money for an emergency, you cannot get your money back before this period. Do not park your emergency money into this.
- Pension received is taxable. In case you have other income along with this pension, your post tax return could be very low.
- Maximum pension limited to Rs 5,000 per month where you cannot meet your expenses during retirement.
Also Read: How to get income post retirement through reverse mortgage loan option in India
Alternatives to Varishtha Pension Bima Yojana
- One can consider taking a term insurance plan for the amount which you may intend (which the nominee would get in case of death of the insured) and balance, invest in a post office MIS scheme (offering 8.4% interest) or Post office Senior Citizens Saving schemes (SCSS) offering 9.2% or Bank FD for Senior Citizens offering 9.50% to 10% per annum. While your returns could be slightly lower side, these options are highly liquid in nature.
- You can invest a partial amount of your retirement corpus in Varishta Pension Bima Yojana and balance in options indicated above. This way you would enjoy both the benefits.
LIC Chairman, SK Roy says “We are targeting 5 Lakh Senior Citizens under this scheme for the year 2014-15”
LIC would administer this pension plan and they expect Rs 10,000 Crores subscriptions, which would be used for the development of the country.
You can visit LIC website / LIC agent for subscribing to this pension plan.
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Suresh
LIC Varishtha Pension Bima Yojana for Senior Citizens
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Whether this amount parked in LIC pension is attachable or not. Normally pension is not attachable in govt
What are the best tax saving schemes with minimum post tax return of 8% for senior citizens, having short holding period, say maximum 3 to 5 years.
Is Service tax is to be paid additionally ? LIC Pune is not clear and sure. However they want to collect it.
Will maturity refund amount be basic plus service tax collected less tds ?
When do u start receiving the pension? Is it from the next month itself, after investment, if monthly option is chosen? Thanks in advance.
when varishta launched intially without service tax at that time maximum investment is 266666/- the investor will get 2000 pm ,but now along with 266666/- service tax 8240 so total 2,75,000,and maximum investment has been increased to 666666/- for 5000 pension with 20,600/- with income taxable so the yeild is not attractive with lock-in-period.i thnik for insurance the service tax should be reduced for senior citizens
I understand that the net investment for Rs 5000 per month is Rs 687265,
inclusive of taxes.
Therefore, the net rate of return is only 8.73 %.
( 5000 x 12 / 687265 x 100 = 8.73 % )
So, it can not be called 9% Varisht Pension Yojana.
With 15 years lock in period and pension taxable, It is not at all attractive.
Some corrections are required in the scheme.
I fully agree with u. Govt. should bring some tax free pension scheme for Senior citizens having attractive return/ intt. rate.