For those looking for a fixed income generation avenue at a higher age, the Pradhan Mantri Vaya Vandana Yojana (PMVVY) can be a good pick. The scheme is currently providing assured pension at 7.40 per cent per annum payable monthly over 10 years.
The monthly withdrawal option of the scheme, which requires a minimum entry age of 60 years, has an upper cap on investment at Rs 15 lakh, for a 10-year term, according to a scheme document.
The pension payment can be received monthly, quarterly, half-yearly and yearly.
The beneficiary can receive a pension between Rs 1,000 and Rs 9,250 per month, depending upon the amount invested.
LIC of India is solely authorised to operate this scheme. This scheme can be purchased offline as well as online.
“For the financial year 2021-22, the scheme shall provide an assured pension of 7.40 per cent per annum payable monthly. This assured rate of pension shall be payable for the full policy term of 10 years for all the policies purchased till March 31, 2022," according to information available on LIC’s website.
Guaranteed rates of pension for policies sold during a year are reviewed and decided at the beginning of each year by the Ministry of Finance, Government of India. The rate decides during the financial year remains the same for the whole policy term of 10 years.
The scheme will provide an assured pension of 7.40 per cent p.a. payable monthly for the financial year 2021-22 also.
Currently, most leading banks are offering interest rates at around 6.5 per cent on their fixed deposit schemes for a tenure of up to 10 years.
In the Pradhan Mantri Vaya Vandana Yojana, depending on the pension option of yearly, half-yearly, quarterly or monthly, the PMVVY interest rate will vary between 7.4 per cent and 7.6 per cent per annum.
The scheme can be purchased by payment of a lump-sum purchase price. The pensioner has an option to choose either the amount of pension or the purchase price.
The plan is available till March 31, 2023.
On survival of the pensioner during the policy term of 10 years, pension in arrears (at the end of each period as per mode chosen) will be payable; while on the death of the pensioner during the policy term of 10 years, the purchase price will be refunded to the beneficiary, according to the scheme document.
On survival of the pensioner to the end of the policy term of 10 years, the purchase price along with the final pension instalment shall be payable.
The scheme allows premature exit during the policy term under exceptional circumstances like the pensioner requiring money for the treatment of any critical/ terminal illness of self or spouse. The surrender value payable in such cases shall be 98 per cent of the purchase price.
A loan facility is also available after the completion of three policy years. The maximum loan that can be granted shall be 75 per cent of the purchase price.
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