Depending on the situation, the Indian government occasionally develops a range of social security programmes. There are numerous programmes that have been around for a while, including the Public Provident Fund (PPF), the Older Citizens Savings Program, the Atal Pension Yojana, and countless more.
People who manage and design retirement plans similar to them. A recent addition to the list is Pradhan Mantri Vaya Vandana Yojana (PMVVY).
The largest life insurance company in India, Life Insurance Company of India (LIC), administers and manages the PMVVY retirement and pension scheme. These are all the details of the programme that you might find interesting.
Till March 31, 2023, the PMVVY programme will still be available for purchase.
The PMVVY system would offer an assured pension of 7.40% p.a. payable monthly for the Financial Year 2021–2022. For the full ten-year insurance period, any policies purchased through the end of March 2022 will be qualified for payment of this guaranteed rate of pension.
What is the Pradhan Mantri Vaya Vandana Yojana, or PMVVY?
The Indian government introduced the Pradhan Mantri Vaya Vandana Yojana (PMVVY), a retirement and pension programme. The government-funded programme made its debut in May 2017.
The purchase price of the scheme is the sum of money that the investors invested. The system provides a secured rate of return on investment because of the sovereign's guarantee.
Monthly, quarterly, half-yearly, or annual regular pension payments are available under the scheme. The PMVVY is a great substitute for conventional bank deposits.
Qualifications for PMVVY
Participation in the PMVVY programme only needs that the subscriber be a senior, i.e. (above the age of 60 years).
The applicant must be an Indian national.
The PMVVY plan does not have an upper age restriction.
The applicant must be equipped to take advantage of the ten-year policy term.
The following are the minimum pension payments covered by the PMVVY:
A total of Rs. 1,000 every month.
Three times a year, 3,000 rupees.
6,000 rupees each biannually.
12,000 rupees yearly.
The following are the maximum pension amounts permitted under the PMVVY:
9,250 per month in rupees.
27,750 rupees per three months.
55,500 rupees per six months.
11,000 rupees yearly.
Under the PMVVY, the total cost of the purchase cannot be more than Rs. 15 lakh.
Needed Documents for PMVVY
The following paperwork must be presented in order to register for the PMVVY programme:
Aadhaar and PAN cards
Verification of identity and address, proof of income, and financial passbook
passport-size pictures and proof of employment or retirement for applicants
Advantages of PMVVY
The following are some of the main advantages of joining the PMVVY programme:
Rate of Return: Over a ten-year period, the PMVVY scheme guarantees subscribers a return of between 7% and 9%. The government determines and changes the rate of return.
Maturity Benefit: After the 10-year policy term has expired, the entire amount (including the final pension and the purchase price) will be paid out.
Pension Payment: During the ten-year life of the insurance, a pension is due at the conclusion of each period in accordance with the selected frequency (monthly, quarterly, half-yearly, or yearly).
Death Benefit: The beneficiary will get the full purchase amount of the policy if the policyholder dies within the policy's term.
Benefit of Loan: After three years, an emergency loan up to 75% of the original purchase price may be accessible. The required pension payment will be reduced by the amount of loan interest, which will be established by the government at regular intervals.
During the course of the policy, the plan enables early exit if certain conditions are met, e. g., if the pensioner or a spouse is undergoing a serious or a terminal illness requiring financial assistance. The surrender value, which in this case is 98% of the purchase price, will be paid to the pensioner in this situation.
Free Look Period: If a policyholder is dissatisfied with the policy, he or she may return it to the LIC within 15 days (or 30 days if this insurance was purchased online) of the date the policy was received, stating the specific reason for the return. The amount that will be repaid during the free look period is the purchase price paid by the policyholder, less any applicable stamp duty and pension fees.
In the case of a policyholder's suicide, the entire purchase money is owed and is not subject to return under this policy.
Application for PMVVY
The PMVVY programme can be joined in a number of ways:
I Online process
visit the official website of the LIC.
By scrolling down the website, pick "Purchase Online Insurance" and then click the "Click here" button.
Choose "Pradhan Manti Vaya Vandana Yojana" from the list of online insurance purchase options.
A new page will appear. On the menu, select "Click to Buy Online".
Once the contact details have been entered, click the "Proceed" button.
Fill out the form completely.
Complete the online registration form, upload the required documents, then press the "Submit" button to complete the register.
(ii) Offline Approach
Pick up an application form at any LIC branch. An example of the PMVVY application form is provided below.
Fill out the application correctly.
Submit the application form, correctly filled out, along with any additional supporting materials, to the LIC branch.
A LIC representative will begin the policy after the documentation has been verified.
PMVVY's Acquisition Price Payment
The programme can be bought, as was already indicated, for a significant sum of money known as the policy purchase price. In exchange for the payment of the purchase price, the PMVVY programme provides the policyholder with a pension for the 10-year insurance period. The policyholder receives their purchase price back at the conclusion of the 10-year insurance period.
The pension is given to the policyholder according to the chosen pension payment method, which may be monthly, quarterly, half-yearly, or yearly, at the end of each period. The pension payment under this scheme will start as soon as the purchase price is paid in the following month if the policyholder selects a monthly form of payment.
Pension payments are made in line with the stated rate of interest earned on the purchase price, which was invested for 10 years, every month, quarter, half-year, and year. The set rate of interest or return on the purchase price is supplied in one of the following ways, which varies depending on the pension payment method:
Way of Paying Pension
Rate of Interest (p.a.) for FY 21–22
Within of PMVVY, the pension payment method
Pension payments may be made every month, every quarter, every half-year, or every year. The manner of pension distribution must be chosen by the policyholder at the time coverage is purchased. For the duration of the policy, the mode cannot be adjusted after it has been chosen.
For the acquisition of the policy, the policyholder requires to have a unique Aadhaar number confirmation. NE and Aadhaar- based payment methods would be used to pay the pension. Hence, in order to collect the pension payments, the pension bearer does not have to go to the bank or LIC agent.
Taxability provisions for PMVVY
The PMVVY is an investment strategy, not a way to reduce taxes. Depending on the investment, the elderly may receive a pension every month, quarter, half-year, or annually. Returns received via this service are taxed at the relevant rate. In accordance with the conditions of this plan, policyholder contributions are not deductible under Section 80C of the Income Tax Act, and the payment is not eligible for an income tax credit. PMVVY, however, is GST-free.
How to Get PMVVY Policy Information
The following steps can be taken to verify the details of the policy:
Visit the Umang PMVVY page in step 1.
Step 2: Locate the "Open" button under the "Policy Basic information" header.
Step 3: On the following screen, click the "Login with MPIN" or "Login with OTP" option.
Step 4: Click "Login" after providing your phone number, MPIN, and OTP.
Step 5: From the drop-down menu under "General Services," select "Policy Basic Info".
Step 6: Type in the "Policy Number" and "Mobile Number" and select "See Details".
Step 7: A screen displays the policy's specifics.
Seniors who want to invest may want to consider PMVVY. Consider this alternative if you're an elderly person seeking for a regular pension. To invest in this strategy, one must have a substantial amount of cash on hand.
Question and Answer
The return interest rates for the pension plan are they determinable or determinable?
Rates of interest are always changing. The interest rates for the policy are altered yearly by the government. However, the pension will begin to be paid that year at the interest rate that will be in effect for the following ten years. During the upcoming fiscal year (FY) 21-22, the interest rates for monthly pension payments are 7.40%, quarterly pension payments are 7.45%, half-yearly pension payments are 7.52%, and annual pension payments are 7.66%.
What portion of a donation can be taken out in a hurry?
In the case of a medical emergency, subscribers are able to withdraw 98% of the purchase price (for themselves and their spouses).
Can a policyholder increase the amount invested in PMVVY?
Yes. A policyholder may make multiple contributions to the plan. The total cost of all policies acquired through this programme for one person, however, cannot exceed Rs. 15 lakh.
How much should I invest if I want a pension that is more than Rs. 1,000 each month?
If your pension payout is greater than Rs. 1,000, you will need to pay a higher purchasing price. As an example: At Rs. 5,00,00, you can acquire the plan and begin collecting Rs. 3,083 each month. According to the rate of return or interest earned on the invested lump sum, the pension is paid. Currently, the yearly rate of return on pension payments is 7.40%.
Hence, if you pay Rs. 1,62,162 for the plan, you will receive a Rs. 10,000 monthly pension. But, you would receive a monthly pension of Rs. 9,250 if you pay the maximum purchase price of Rs. 15,00,000. With this plan, you can invest up to Rs. 15,00,000 and receive a maximum monthly pension of Rs. 9,250 at an annual rate of 7.40%.
Can a husband and wife jointly purchase PMVVY shares?
Yes. Under the new PMVVY, the annual cap on investments has been modified from being per family to being per citizen. A senior citizen may purchase the insurance coverage for a maximum of Rs. 15 lakh in accordance with this. The husband and wife might each deposit Rs. 15 lakh if they are elderly residents.
How may a beneficiary or nominee obtain the PMVVY purchase price in the event that a policyholder dies within 10 years of the programme?
The beneficiary or nominee should make a death claim by notifying the LIC branch office where the policy is currently in force if the policyholder passes away within the policy term. The application for the claim and any supplemental paperwork must be submitted by the beneficiary or nominee. Upon examination of the request following receipt of the claim application, the purchase money will be refunded by the LIC.
Documents for claim filing are :
Documents proving the nominee's or beneficiary's identity
In the event of an unnatural or accidental death, further records, such as a police FIR, a post-mortem report, hospital records, and medical certificates, may be needed.
Should I file a claim with PMVVY to get my purchase money back?
No, only at the end of the policy period would the LIC present maturity claims. The last pension installment as well as the purchase price would be given to the policyholder by the LIC.