The Union Cabinet has approved the doubling of the investment limit under the Pradhan Mantri Vaya Vandana Yojana from ₹7.5 lakh to ₹15 lakh. The move will enable senior citizens to earn pension up to ₹10,000 per month.
The Cabinet also extended the last date for subscription to the scheme from 4 May this year to 31 March 2020. It protects those aged 60 years and above from a possible future fall in interest income due to uncertain market conditions.
The scheme is being operated through Life Insurance Corporation. PMVVY provides an assured pension based on a guaranteed rate of return of 8% per annum payable monthly for the period of 10 years, which is the policy tenure. The differential return, which is the difference between the return generated by LIC and the assured return of 8% per annum, would be borne by the government as subsidy annually.
The scheme can be bought online as well as offline through LIC. The pension can be paid monthly, half-yearly, quarterly or annually during the policy tenure of 10 years as per the convenience of the subscriber at the time of purchase.
The scheme is exempt from service tax / GST. The pensioner upon survival till the end of the policy tenure can claim the purchase price along with the final pension instalment.
For policyholders in need of loans, the scheme also enables loans of up to 75% on the purchase price after three policy years have passed. The loan interest can be recovered from the instalments, with the loan recovered from claim proceeds.
Additionally, PMVVY allows premature exit in case of treatment of any critical or terminal illness of self or the spouse. In case of premature exit, 98% of the purchase price is refunded to the policy holder.
Earlier, the scheme was opened for subscription for a period of one year, from 4 May 2017 to 3 May 2018.