Pradhan Mantri Vaya Vandana Yojana Extended | 22 May 2020

Why in News

The Union Cabinet has extended Pradhan Mantri Vaya Vandana Yojana (PMVVY) for a period of three years. This social security scheme for senior citizens will now be valid till March 2023.

  • Earlier, the scheme was open till 31st March, 2020.
  • Initially an assured rate of return of 7.40% per annum for the year 2020-21 per annum will be provided and thereafter to be reset every year in line with the Senior Citizen Savings Scheme (SCSS).
  • The Finance Minister will approve an annual reset rate of return at the beginning of every financial year.

Key Points

  • The Pradhan Mantri Vaya Vandana Yojana was launched in 2017 by the Ministry of Finance to offer a guaranteed payout of pension to senior citizens every month.
  • The Scheme can be purchased offline as well as online through the Life Insurance Corporation (LIC) which has been given the sole privilege to operate this Scheme.
  • Eligibility:
    • Minimum Entry Age: 60 years (completed)
    • Maximum Entry Age: No limit
  • Components:
    • One can invest a maximum amount of Rs. 15 lakh under PMVVY scheme. The tenure of policy is set at 10 years.
    • Senior citizens can draw a minimum pension of Rs. 1,000 per month depending on the amount invested in the scheme. The maximum pension amount is limited at Rs. 10,000 per month.
    • Pension will be payable as per the frequency of monthly, quarterly, half-yearly, yearly as chosen by the pensioner at the time of purchase.
    • Aadhar has been made mandatory to avail the benefit of the scheme.
  • Role of the Government:
    • The Government’s financial liability is limited to the extent of the difference between the market return generated by LIC and the assured rate of return (7.4% for 2020-21).
    • The pension is based on the assured rate of return.
    • This protects elderly persons aged 60 years and above against a future fall in their interest income due to uncertain market conditions.
  • Other Benefits:

Source: Mint