Planning for Retirement? Pradhan Mantri Vaya Vandana Yojana Can Help

Planning for Retirement? Pradhan Mantri Vaya Vandana Yojana Can Help

The Pradhan Mantri Vaya Vandana Yojana (PMVVY) is a government-backed pension scheme designed to offer financial security to senior citizens in India. Launched in 2017, it's a joint initiative between the Government of India and the Life Insurance Corporation of India (LIC).

Eligibility and Benefits

Open to individuals aged 60 and above, PMVVY provides a guaranteed pension income for ten years. The assured return on investment is revised annually, currently standing at 7.4% per annum. This translates to a monthly payout for the entire policy term, irrespective of market fluctuations.

Here's a breakdown of the key benefits:

• Regular Pension Income: PMVVY ensures a steady flow of income throughout the policy term, providing financial stability during retirement.
• Assured Returns: Unlike market-linked investments, PMVVY offers a fixed interest rate, safeguarding your investment from market volatility.
• Flexible Payout Options: You can choose to receive your pension monthly, quarterly, half-yearly, or annually, as per your financial needs.
• Maturity Benefit: Upon policy maturity, you receive the full purchase price invested in the scheme along with the final pension instalment.
• Death Benefit: In case of the policyholder's demise during the policy term, the nominee receives the entire purchase price as a death benefit.
• Surrender Value: PMVVY offers a surrender value after three policy years, allowing you to access 98% of the purchase price in case of emergencies.
• Loan Facility: After three successful policy years, you can avail a loan against your PMVVY investment, subject to a maximum of 75% of the purchase price.

Example: Understanding the Benefits in Action

Consider Mr. Shah, a 65-year-old retiree who opts for PMVVY by investing a lump sum of Rs. 7 lakhs. He selects a monthly pension payout.

• Monthly Pension: The monthly pension amount is calculated as (Rs. 7,00,000 * 7.4%)/12 = Rs. 4,180 (approximately).
• Assured Income: Throughout the ten-year policy term, Mr. Shah receives a fixed monthly pension of Rs. 4,180, regardless of market conditions.
• Maturity Benefit: Upon policy maturity, Mr. Shah gets back his initial investment of Rs. 7 lakhs along with the final pension instalment.
• Financial Security for Dependents: In case of Mr. Shah's unfortunate demise during the policy term, his nominee receives Rs. 7 lakhs as the death benefit.

Application Process: Online and Offline Options

You can apply for PMVVY through either online or offline channels:

• Offline Application: Visit your nearest LIC branch and obtain the application form. Fill it out, submit the required documents, and pay the premium amount.
• Online Application:

1. Head to the LIC website and look for the online policy purchase section.
2. Search for 'Pradhan Mantri Vaya Vandana Yojana' and select the online application option.
3. Create an Access ID by entering your contact information.
4. You’ll get a unique 9-digit ID to your registered mobile number or email.
5. Once you have the ID, enter it and proceed to fill out the application form.

6.       Choose your preferred PMVVY plan, complete the application electronically, upload scanned copies of the required documents, and finalize the process by making the payment.

Required Documents

• Aadhaar Card
• PAN Card
• Bank account details where you wish to receive the pension

Key Points to Remember

• PMVVY is currently operational until March 31, 2023.
• The minimum and maximum investment amounts vary depending on the chosen pension payout mode.
• Carefully review the date of receipt, risk commencement date, policy revival date (if applicable), and rider addition date (if applicable).

Conclusion

With its assured returns, flexible payout options, and safety features, The Pradhan Mantri Vaya Vandana Yojana plays a significant role in securing your financial well-being during your retirement.