Pradhan Mantri Vaya Vandana Yojana (PMVVY) is now available to senior citizens in its new avatar. Being the sole institution allowed to mobilize funds in the scheme, the Life Insurance Corporation (LIC) has come out with the details of the Pradhan Mantri Vaya Vandana Yojana (Modified 2020). PMVVY, which had earlier closed on March 31, 2020, was recently extended by the government for another three financial years till March 2023.
To invest one may approach any LIC agent or buy it directly from the insurer’s website. The extension of PMVVY will come as a relief to senior citizens as the interest rate on bank fixed deposits seems to be falling in a hurry.
PMVVY – New rules
The biggest change in the new modified version is the reduced pension rates. The Modified PMVVY will carry lesser interest rate on the investment than before. Unlike in the older version of PMVVY, in the Modified PMVVY, the interest rate will keep varying depending on the financial year (FY) in which the investment is made.
The scheme is for 10 years and on investments made in the FY 20-21 till March 31, 2021, the government has declared the interest rate of 7.4 per cent payable monthly i.e. 7.66 per cent per annum for the entire duration of ten years. For investments made in the next two FY i.e. 2021-22 and 2022-23, the government will declare the PMVVY interest rate at the start of each FY.
The annual reset of the assured rate of interest will be effective from April 1st of the financial year in line with the revised rate of returns of Senior Citizens Saving Scheme (SCSS). For the Modified PMVVY, the maximum rate of interest is capped at 7.75 per cent at any point.
PMVVY is exclusively available to those who are 60 years of age and above. The PMVVY is a pension scheme for senior citizens that comes with guaranteed returns on monthly, quarterly, half-yearly or on an annual basis for a period of 10 years. As an investor, you can decide on the basis of the pension amount that you want or the purchase price that you want to invest in PMVVY.
The maximum investment that can be made in PMVVY is restricted to Rs 15 lakh per senior citizen and the maximum monthly pension in PMVVY is Rs 9,250 per senior citizen. So, if both spouses are above age 60, the maximum monthly pension can be Rs 18,500 in the family on an investment of Rs 30 lakh. The pension in PMVVY is not dependant on the age of the investor.
PMVVY- Minimum and Maximum Investment
Mode of Pension: Yearly
Minimum investment (Purchase Price) : Rs 1,56,658
Maximum investment : Rs 14,49,086
Mode of Pension: Half-yearly
Minimum investment : Rs 1,59,574
Maximum investment : Rs 14,76,064
Mode of Pension: Quarterly
Minimum investment : Rs 1,61,074
Maximum investment : Rs 14,89,933
Mode of Pension: Monthly
Minimum investment : Rs 1,62,162
Maximum investment : Rs 15,00,000
PMVVY – Minimum and Maximum Pension
Rs. 1,000 per month
Rs. 3,000 per quarter
Rs.6,000 per half-year
Rs.12,000 per year
Rs 9,250 per month
Rs. 27,750 per quarter
Rs. 55,500 per half-year
Rs. 1,11,000 per year
The government had recently reduced the interest rate on post office monthly scheme to 6.6 percent while the RBI Taxable bonds and SCSS are available at 7.75 percent per annum and 7.4 per cent respectively. One may decide to diversify across these investments after keeping the regular income need, taxation and liquidity into consideration.