PMVVY scheme modified! Senior citizens can get Rs 18,500 per month pension for 10 years

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 a 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 percent payable monthly i.e. 7.66 percent 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 the Senior Citizens Saving Scheme (SCSS). For the Modified PMVVY, the maximum rate of interest is capped at 7.75 percent at any point.

PMVVY Features

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 a monthly, quarterly, half-yearly, or 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 has 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 dependent 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

Minimum Pension

Rs. 1,000 per month

Rs. 3,000 per quarter

Rs.6,000 per half-year

Rs.12,000 per year

Maximum Pension

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 the 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 percent respectively. One may decide to diversify across these investments after keeping the regular income need, taxation, and liquidity into consideration.