Yesterday, Indian Cabinet ministry has approved relaunch of Varishta Pension Bima Yojana 2017 as part of Government Social security and Financial inclusion scheme for Senior Citizens. Earlier, it was launched on 15th August, 2014 for only 1 year and now it would reopen the same shortly. Varishtha Pension Bima Yojana 2017 provides 8% assured returns which are payable per month by way of pension. How good is Varishtha Pension Bima Yojana 2017? What are the positives and negative about this Central Government Varishta Pension plan of 2017?
Also read: Benefits of New Pension Scheme (NPS)
Features of Varishtha Pension Bima Yojana 2017
- Scheme would be opened shortly. The dates are yet to be announced.
- The scheme would be open for subscription for 1 year from the date of launch.
- Minimum age : 60 years
- Scheme provides an assured pension on a guaranteed rate of return of 8% per annum for next 10 years. Later the interest rate can change. Currently bank FD's are providing 7% to 8.5% for Sr. Citizens, however they can change year on year.
- Scheme would be implemented through LIC and in this financial year.
- The differential return between LIC generated return Vs 8% paid by LIC would be borne by Government as subsidy on an annual basis.
- Other details are yet to be announced.
Features of earlier Varishtha Pension Bima Yojana 2014-2015
- While we are yet to get complete details about some of the features of VPBY2017, let us look at some of the features of this scheme which was launched 2.5 years back.
- It had Single premium payable between Rs 66,665 to Rs 6,66,665
- It had Pension amount of Rs 500 to Rs 5,000 depending on the single premium paid.
- Earlier the option was that, 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 2017
- 8% assured returns per annum.
- This assured returns would be for next 10 years. Even if interest rates are falling, Sr. Citizens would still get such returns for long term of 10 years.
- 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 2017
- Investment cannot be closed before maturity period. Earlier the maturity period was 15 years. Currently the details are yet to be announced. 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.
Alternatives to Varishtha Pension Bima Yojana 2017
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 over 7.7% interest) or Post office Senior Citizens Saving schemes (SCSS) offering 8.5% or Bank FD for Senior Citizens offering 8% to 9% per annum. While your returns could not be for a long term, these options are highly liquid in nature.
You can invest a part of your retirement corpus in Varishta Pension Bima Yojana and balance in options indicated above. This way you would enjoy both the benefits.
This post would be updated once we get complete details about the features for this scheme of 2017.
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LIC Varishtha Pension Bima Yojana 2017
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