7.4% PM Vaya Vandana Yojana Pension Plan – Features, Benefits and How to buy?
A few years back, Govt of India has launched PM Vaya Vandhana Yojana Pension Plan (PMVVY) aimed to get secured an immediate pension for Senior Citizens in India. However, such plan was open till 31st March, 2020. PM Vaya Vandana Yojana has extended now for another 3 years, i.e. till 31st March, 2023. Pradhan Mantri Vaya Vandana Yojana Pension Plan (PMVVY) is administered by LIC and indicated this as Plan no. 842. What are the key changes in PMVVY in 2020? What are the key features and positive factors in Pradhan Mantri Vaya Vandana Yojana Scheme in 2020? Are there any negative factors in PMVVY Pension plan? What are the best alternative options Senior Citizens have beyond PMVVY?
What are the key changes in PMVVY in 2020?
Here are the major changes announced during PMVVY scheme extension in 2020 now.
1) PMVVY scheme is extended from 31st March, 2020 to 31st March, 2023.
2) The interest rate earlier was at 8% up to 31st March, 2020 and these are revised now. PMVVY interest rate for 2020-21 would be 7.4%.
3) One can get maximum pension of Rs 10,000 per annum with a minimum single premium of Rs 1.44 Lakhs earlier. Since the interest rates are changed, this single premiums are increased now to Rs 1.56 Lakhs from 2020 onwards.
4) If any one is applying PMVVY scheme now, the interest rate would be decided every year from 2020-2021 onwards. If you have already opted before 31st March, 2020, you can continue to enjoy 8% interest rates.
5) PMVVY interest rates are now linked with SCSS (senior citizens saving schemes). Means the interest rates are announced along with SCSS is going forward.
Now let us check more details about the PM Vaya Vandana Yojana Scheme.
Key Features in PM Vaya Vandana Yojana Pension Plan
Here are the key features.
This is single premium pension plans where one can get regular income through a pension. It could be monthly, quarterly, half yearly or yearly.
This pension scheme provides guaranteed pension of 7.4% based on current interest rates.
Any individual who has attained of 60 years can opt for this scheme.
There is no Maximum age of entry in PMVVY.
This pension plan is now open for subscription and closes on 31st March, 2023.
The tenure of the pension plan is 10 years.
One can get minimum pension of Rs 1,000 (Monthly), Rs 3,000 (Quarterly), Rs 6,000 (Half Yearly) and Rs 12,000 (Per annum) from this scheme.
Maximum pension plan payable is Rs 10,000 (Monthly), Rs 30,000 (Quarterly), Rs 60,000 (Half Yearly) and Rs 120,000 (Per annum).
One can invest Rs 15 Lakhs if they are willing to opt for the maximum pension of Rs 10,000 per month.
Pension amount would be directly credited to bank SB account.
This plan is administered by LIC. It is named as Pradhan Mantri Vaya Vandana Yojana (plan no. 842).
Pensioner would get a loan up to 75% of the single premium paid by them. The interest on such loan would be deducted from pension amount.
One can surrender this policy, but terms and conditions apply.
How much a single premium is payable to get a minimum pension?
If you are looking to get the minimum pension amount, you can check Pradhan Mantri Vaya Vandana Yojana calculator below.
1) Rs 1,000 monthly pension – Investment of Rs 1.5 Lakhs
2) Rs 3,000 quarterly pension – – Investment of Rs 1.49 Lakhs
3) Rs 6,000 half yearly pension – – Investment of Rs 1.47 Lakhs
4) Rs 12,000 yearly pension – – Investment of Rs 1.44 Lakhs
How much a single premium is payable to get a maximum pension?
If you are looking to get the maximum pension amount under PMVVY, you need to invest single premium as indicated below.
1) Rs 10,000 monthly pension – Investment of Rs 14.45 Lakhs
2) Rs 30,000 quarterly pension – Investment of Rs 14.76 Lakhs
3) Rs 60,000 half yearly pension – Investment of Rs 14.9 Lakhs
4) Rs 120,000 per annum pension – Investment of Rs 15 Lakhs
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Benefits in Pradhan Mantri Vaya Vandana Yojana Pension plan
Here are the major benefits of the PMVVY pension scheme.
1) Benefit during the tenure of the scheme: Subscriber would get a regular pension during the term of the pension plan depending on the option chosen by them (Monthly, Quarterly, Half Yearly or Yearly).
2) Death Benefit: In case of death of the pensioner during the term of the pension plan, the nominee or legal heirs would get the single premium purchase price of the scheme. This applies even if pensioner commits suicide.
3) Maturity Benefit: If the pensioner survives till the end of the pension plan tenure, they would get back their purchase price along with the last installment of the pension amount.
Why to invest in Pradhan Mantri Vaya Vandana Yojana Pension Plan?
Here are some key reasons you should invest in this scheme.
1) Investors would get guaranteed 7.4% returns for next 10 years.
2) Currently banks are offering lower interest rates of 5% to 6.5% and such rates could fall further. PMVVY is the best plan as the returns are guaranteed and would not fall further once you subscribed.
3) Single premium is same for all age groups in this plan. In pension or annuity plans, it would differ based on the age of the subscriber.
Why NOT to invest in PM Vaya Vandana Yojana Pension Plan?
Here are some key reasons why one should not invest in this plan.
1) While the investment tenure is 10 years, there are no tax benefits available while investing in such scheme.
2) Pension received is taxable in the hands of the pensioner and paid based on individual income tax slab. Hence there are not tax benefits even in pension income.
3) This pension scheme cannot be liquidated easily unless on specific conditions like medical treatment for specific diseases. If there is any emergency need to withdraw money, it is not possible to withdraw quickly in this pension plan.
4) The highest pension amount paid is Rs 10,000 per month on this plan is low and might not be sufficient to bear the current expense.
Are there any alternatives for PM Vaya Vandana Yojana Pension Plan?
Since PMVVY has a few negative factors, one can try any of the below options too.
1) GOI Savings Bonds: GOI Savings Bonds in 2020 is one alternative option. It has 7 year maturity period and offer 7.75% interest rates. One can invest as low as Rs 1,000 and it is zero risk as these are issued by the Government. One can get half yearly interest or interest on maturity by investing in this FD scheme. If Senior Citizens think they have sufficient money for any emergency and beyond that they have surplus money which they want to invest for 7 years tenure and expect safe returns, they can opt for these government bonds.
2) SCSS: Another investment option for Senior Citizens is SCSS. Senior Citizen Saving Scheme (SCSS) from the post office and banks now offer 7.4% per annum interest rates that has tenure of 5 years. Interest is computed quarterly and paid every quarter. One can invest a maximum of Rs 15 Lakhs in SCSS. Since interest rates are same, one may not get higher returns. However SCSS has 5 years tenure, hence SCSS scores high in terms of liquidity po0st 5 years. One should first opt for SCSS and PMVVY (considering negative factors).
3) PO MIS Scheme: Post Office MIS Scheme offers 6.6% interest rates and it has 5 year maturity period. Senior Citizens can invest Rs 4.5 Lakhs in individual status and Rs 9 Lakhs in joint account stats and get higher interest rates compared to other bank FD schemes.
How to invest in Pradhan Mantri Vaya Vandana Yojana LIC Pension Plan?
You can buy or invest in a PMVVY scheme from LIC who is the administrator of this scheme. This pension plan is available in both offline and online mode. You can log in to LIC website and fill PM Vaya Vandana Yojana Form online or visit the nearest LIC branch for offline method.
Should you opt Pradhan Mantri Vaya Vandana Yojana Pension Plan?
Like I indicated earlier, the decision of opting or not opting such plan lies with Senior Citizens.
Ideally, they should not take the risk. All other schemes have an element of risk that the interest rates can go down in the future. However PMVVY can provide 7.4% guaranteed returns for next 10 years. If Senior Citizen wants to get the regular pension amount without taking any risk and has a sufficient amount for any emergency need, they can opt for such schemes. Alternatively, they can invest in other alternative investment options indicated above. One should always diversify some amount in such pension plans and some amount in alternative investment options.
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Pradhan Mantri Vaya Vandana Yojana Pension Plan