New 8% Pension Scheme, PMVVY, Launched

Why in news ?

Finance Minister Arun Jaitley has formally launched the Pradhan Mantri Vaya Vandana Yojana (PMVVY), or a pension scheme, for senior citizens.

What is the aim of the scheme ?

Under this scheme, senior citizens (60 years and above) in which they will get a guaranteed interest of 8 per cent for 10 years. Pension scheme will offer more avenues to senior citizens to earn steady regular income at a time of falling interest rates. The scheme is exempted from GST or goods and services tax.

  • PMVVY can be purchased offline as well as online through Life Insurance Corporation (LIC) of India which has been given the sole privilege to operate this scheme.
  • The scheme will provide an assured return of 8 per cent per annum payable monthly (equivalent to 8.30 per cent per annum) for 10 years.
  • The pension is payable at the end of each period, during the policy term of 10 years, as per the frequency of monthly/ quarterly/ half-yearly/ yearly as chosen by the pensioner at the time of purchase.
  • There is a minimum and maximum limit for investment in Pradhan Mantri Vaya Vandana Yojana Scheme. The amount varies according to the pension payment mode chosen.
  • On survival of the pensioner to the end of the policy term of 10 years, purchase price along with final pension instalment shall be payable.
  • Loan up to 75 per cent of purchase price (amount invested to earn pension) shall be allowed after three policy years to meet the liquidity needs.
  • The scheme also allows for premature exit for the treatment of any critical/ terminal illness of self or spouse. On such premature exit, 98 per cent of the purchase price shall be refunded.
  • On death of the pensioner during the policy term of 10 years, the purchase price shall be paid to the beneficiary.

Source : Pib

GS II : Welfare schemes for vulnerable sections of the population by the Centre and States and the performance of these schemes; mechanisms, laws, institutions and Bodies constituted for the protection and betterment of these vulnerable sections

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