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.
If you like this article, please share this on your Facebook or Twitter. This would be a special gift which you would be giving to our blog.
Suresh
LIC Varishtha Pension Bima Yojana for Senior Citizens
- Why a Term Plan is the Best Insurance Option in India for Long-Term Financial Security? - December 12, 2024
- 5 Smart Strategies for Investing in NFOs - December 11, 2024
- 10.75% Sammaan Capital NCD Dec-2024 – Interest Rates, Risks & Investment Review - December 8, 2024
Dear Priminister
It is my suggestion that you start a Health Insurance cover for the senior citizen who have retired and who do not have any regular income other than interest received of their retiral corpus. As in current scenerion it is important that you float a scheme for senior citzen to take care their health insurance at low cost. This will be a big reform and relife to senior citizen having limited income.
I agree Arun
I am also a retired person from a private industry. Certainly doubtful about the future and living in tension all the time. Living alone with wife. Both not enjoying good health. Having paid heavy income tax all through I find my self a totally abondoned person by our Govt.
My humble request and proposal to the PM is that we strongly deserve at least the dearness allowance (DA) which is given to the pension earners and govt employees as revised from time to time.
We are living in the same market where the price rise is common to all citizens. There can not be any argument against this.
I feel every senior citizen shall put money in this scheme such at advanced age one shall not be put under problem. At the same time harassment either by bank, or friends, or relatives who are trying to sobbatage or loot the senior citizens could be prevented.
IT IS EXCELLENT PENSION PLAN FOR SENIOR CITIZEN INTRODUCED BY MODI GOVT.BY LIC OF INDIA A SINGLE PREMIUM.WE PEOPLE OF UNITED BHARAT-NEW INDIA TO MAKE DEVELOPMENT OF ALL RESPECTIVE OF MAJORITY-MINORTY AS NEHRU -GANDHI ERA IS ENDED.NOW WE ARE IN NEW ERA OF MODI BJP TO SHINE IN WORLD EVEN AS OPPOSED BY ALL PARTIES FOR SELFMOTIVE TO MAKE MONEYWEALTH FOR SELF,PARTY&NEXT GENERATION.JAI UNITED BHARAT-NEW INDIA.JAI HIND.
please chart for investment
Mr.Modiji,
Please think for Sr.citizen. FD interest rate at bank for sr.citizen should be minimum 8 to 9% so that they can leave in a minimum way. Hope you will do something.Like me many people are not getting pension as they have worked in Private Company.
Ther are so many public sector enterprises which do not have pension benifits . Retirees from such unit also suffer.
MODI JI , YOU HAVE INCREASED THE SALARY OF GOVT EMPLOYEES. YOU HAVE DECREASED THE INTEREST RATE AND THUS PAYMENTS TO SR CITIZEN. HOW THEY WILL SERVIVE ? KINDLY BRING SOME SCHEME TO BENEFIT SR. CITIZENS SO THAT THEY CAN SERVIVE IN PRESENT ATMOSPHERE. FINANCE MINISTER IS NOT PAYING ANY ATTENTION ON THESE PERSONS. YOUR ANNOUNCE 8% INTEREST FOR 7.5 LAKHS FOR 10 YEARS WILL NOT BE USEFUL IN PRASENT ATMOSPHERE. DOCTOR IS TAKING Rs500 TO Rs 1000 /- FEES FOR CHECK UP AND MINIMUM TWO TO THREE VISITS TO DOCTOR IS NECESSARY . THEN HOW SR CITIZEN WILL SERVIVE ?
absolutely right
I am a Senior Citizen aged 85 years living with my wife aged 76 years . I retired from govt. Owned public sector Indian telephone industry in the year 1989 after serving 38years. The total money I got after retirement was just rs. Within three lakhs. This amt. Was not sufficient to manage my family of five persons including my three daughters. With great difficulty I managed celebrate marriage of three daughters who are unemployed. I have no sons. After retirement I worked in a private firm and saved four lakhs which is deposited in a co operate bank. I am not getting pention or any other income. I am finding it very difficult to manage with the bank interest. Suggest me any method to earn another 2000 to 3000 per month under govt. Plans.
I am one of your collegue sailing in the same boat.
Varishtha pension bima yojna was started from 15 Aug 2014 to 14 Aug. 2015 without considering the people who will be completing 60 yrs. after 14 Aug. 2015.
I request the Honorable PM to re start this scheme.
Varishtha bima pension yojna should be retarted. Good scheme for median varishts from central Govt.
It is very good pension scheme for senior citizens. Very well point you have described here, central government has taken very good decision for the life security of senior citizens. We hope for the best from this government will take care for our country people.
it is very sad that Mr. Modi talked so much before election , nothing realy helped Sr. citizen , contrary he hiked
all govt empoloyee salary by 25%., what about Sr.citizen .actualy they are most the deserving people, to the
least atleast hike FD rates for SR.CITIZEN in banks .post office or lic . dont about Mr. A..JAITLAY.
Hope somebody will consider for Sr.citizen next year 2017.
can anyone tell me how does this plan work for senior citizen?
My pension policy numbers given below : 908141764,908141765, 908141766, 908141767. Dated 13 Aug 2015. Amount paid by cheque no. 992224 dt. 11 Aug 2015 for Rs. 266660/- drawn on YES Bank, Vasai Road. Each of the above policy carries a pension amt. of Rs. 6000/-pa.to be sent through NEFT to my saving a/c in Union Bank of India, Manickpur branch, Vasai Road. On 1Sept.pension on two policies out of the above four polices is credited to my account. When will the pension on remaining two polices be credited? Please reply.
On taking the plan, I made an enquiry from LIC about the taxability of the plan. the reply dt. 28-9-2015 received from Customer Zone is as under:
“customerzone_lucknow
DEAR SIR,
THERE IS NOT ANY DEDUCTION UNDER THE SECTION 80C ,80CCC OF THE INCOME TAX ACT. THIS PLAN IS TAX FREE PLAN.
With Sincere Regards,
Manager(C.Zee)
LIC CUSTOMER ZONE
SHOP NO. 9& 10
JEEVAN BHAVAN-1(GROUND FLOOR)
43 HAZRATGANJ,LUCKNOW 226001 ”
Please confirm /advise that the pension received under the plan is indeed tax free.
thanks
Service tax @ 3.09% of the invested capital is either deducted from the capital or charged additionally. This applies to all annuities as well. So the return on an investment of Rs.6,66,665 after service tax will be Rs.58145.85 per annum @ 9% and not Rs.60,000 per year. Further the income is taxable. After adjusting for income tax at the minimum rate of 10.3%, net income will be Rs.52,156.83 per annum or Rs.4346.40 per month.
THIS SCHEME IS JUST AN EYEWASH AND NO REAL HELP TO SENIOR CITIZEN. GOVT.MUST COMEOUT WITH REAL GENUINE SCHEME OFFERING ATLEAST A 12% TAX FREE RETURN FOR A LIMITED SUM OF RS.1 LAKH MIN. TO RS.10 LAKH MAXIMUM FOR THE ALL SENIOR CITIZENS.THE LOCKIN PERIOD SHOULD BE A MAXIMUM 10 YEARS. AFTER DEATH THE SCHEME MUST BE CONTINUED FOR THE SPOUSE AT THEIR OPTION
locking period 15 years-intrest taxible-intrest Less than some banks- inform how useful for senior citizens?
In case i take a insurance policy for Rs 66665/- before 15th august 2015 would like to know:
1. The amount deposited is covered under 80C of Income tax rebate.
2. When my pention will start?
3. what is lock in period and how many times the premium has to give for continuing the policy.
i am become senior citizen 280faugust2015 is this scheme will continue or not
Lock in period must not more than 5 year.when govt. bank is paying 9.2% ,than how it is benefited?
if I invest on 14th Aug 15,when I am going to get my 1st pension amount/
i invested varishtha pension yojana scheme rs.65430..policy no.707062647 dt.28.10.2014..which states my 1st pension would be paid on 28th april 2015.. pension not recd even after due date..anxious to know when i will get first pension
Good to the point sharing information.
this is the best for senior citizens who not get pension and also get the pension to invest.
How to become development agent for this proposal? After qualifying for agency when one can buy policy?
Wo is LIC principal LIC development officer at Thane near abut Naupada?
Dhananjay Latkar
25306675
If you were to opt for the Varishtra pension bima yojana for senior citizens i.e. monthly pension for maximum amount of Rs.6,66,665/-. from when will the first pension start.
Analyst sir,
After reading merits and demerits of scheme its confusing what about Loyalty additions which LIC generally gives upon maturity of scheme, Hitch clarifications not given
Sir,
A friend of mine has taken this Pension Bima Yojna. She has issued the cheque for the required amount, along with PAN Card, address & ID proof, as also details of bank account etc, and the Certificate has been issued.
Now she has got an intimation from LIC, asking for her latest IT Returns or Pension Card or Bank Statement of the last 3 months.
I would like to know, why proof of income or pension is necesary? She has invested her money and all that LIC has to do is to credit the interest to her bank account.
Why should anyone’s income be made public, in this case? They do not require to judge my repaying capacity because it is not a loan.
it is her money that she has invested on which they have to pay interest.
Hi Mr. Suresh KP,
I read the post and firstly found interesting… But later when i read that the receivable amount is taxable; then why to invest in LIC policy, instead invest in Fixed Deposit…. Atleast whenever required, can be used… In this the amount is blocked for 15 years.
I didnt find this policy impressive. Thank you for all the information.
Thank you.
I think the main problem with this type of policy is the risk of loosing capital itself. As the capital is paid either after 15 years or on the death of the policy holder, the nominee usually who is old, should know the details of the policy to get the capital. I think there should be some kind of mandatory requirement where the policy holder should prove that he is alive every 2 years by visiting certain office otherwise the nominee should automatically get a notice to present herself at the office. This will act as a reminder to the nominee that there is an amount thet she can collect. There are many of these government long term schemes where crores of rupees are pending as unclaimed money due to the nature of the scheme.
is there any risk cover by purchasing VPBYojna policy for the amount RS. 66665/ or the investment for the amount paid?
No risk cover Opkhattar
Scheme is good
the best option for varisht pension yojana in lo long tim e
ajay tanwar lic
churu
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.
Where can I secure the enrolement form?
100000/- Policy What are tax benefits , How much Sum assured, If death before 15yrs how much nominee will recd, After 15 yrs I will receive any lum sum amount
if the date of birth is 20/12/1954 will be eligible for this new varistha bima pension plan
u will be eligible on 20/12/2014. good scheme for people having no pension from any source.
I don’t understand why a senior citizen would need a term plan. As by that time one will have his dependents already settled. Again a term insurance at that age will be extremely costly and that is if any insurer agree to offer him one. Otherwise I am always a big fan of your article. It is also written with strong analytical skills. love the work that you are doing
Hi Ricky, This is open for 60 years onwards. By that time, if their financial goals are not fulfilled, they can go for it. Yes it is costly at that age,but if you still want to achieve your goals during those last days of working before retirement, there is no other choice. Thanks for your comments Rick. What do you do and how you are saving and growing your money ?
Hi Suresh, excellent work being done here. You say that we can invest from 55 yrs here but in the article you mentioned 60. Which would be accurate. My understanding was that you had to be 60+ to invest in this. Thanks
Oops, in commet, by mistake i specified as 55 years. I have corrected this now. Thanks for correcting this comment. Pls mail me your address suresh@myinvestmentideas.com, I would like to send a small token of gift.
good update as early as d policy introduced
I presume the returns are taxable but please confirm. What about TDS? A leading newspaper in Maharashtra has mentioned tax free returns.
I already indicated. These are taxable returns. The details published in the form does not talk about tax free returns. Pls provide link which indicates this
GOOD INFORMATION EXCEPT – 1. CAN A PERSON BUY MORE THAN ONE POLICY SUBJECT TO MAXIMUM LIMIT ?AND
2. WILL IT NOT BE USEFUL IN LONG RUN COMPARED TO BANK FD WHICH I THINK OFFERS MAX INTEREST FOR ONLY A LIMITED PERIOD OF 3 – 5 YEARS?
1) No 2) Agreed
This is a very good Info but:
What the differance between PPF and LIC? and which one is good?
Thank you sir
LIC is for term insurance, pension plans etc. PPF is where you invest every month or year and would get maturity. This does not have risk cover i.e. if something happens to you, PPF would not pay any extra. Yo uwould get what you invested plus interest
Thank you for the info
Hi Suresh,
I love to read your articles and I am sure it helps lot of people like me. Like your other articles this too is very informative. Personally I would prefer the alternative option (mentioned above) considering it would help maintaining some liquidity in the money invested. However regarding the term insurance part, I don't think many providers will provide term insurance to senior citizens. Being an actuarial professional, I do know the risk of including them while pricing a term insurance policy. Do let me know your thoughts.
Thanks!
Nabajit
You have not mentioned about TDS in your analysis which is very important for the kind of senior citizens that you have mentioned could consider invesing