New pension scheme PMVVY to be launched today: 10 main things you need to know

Finance Minister Arun Jaitely will formally launch the Pradhan Mantri Vaya Vandana Yojana (PMVVY), a new pension scheme for senior citizens today.

Prime Minister Narendra Modi had earlier announced the pension for senior citizens at 8 per cent fixed rate of interest on their savings.

This pension scheme will be exempt from both service tax and Goods and Services Tax.

Here is everything you need to know about the new pension scheme:

1. The Pradhan Mantri Vaya Vandana Yojana (PMVVY) is exclusively for the senior citizens aged 60 years and above which is available from May 4, 2017 to May 3, 2018.

2. The Pension scheme can be purchased offline as well as online through Life Insurance Corporation (LIC) of India, which has been given the sole privilege to operate this.

3. The scheme assures a return of 8 per cent per annum payable monthly (equivalent to 8.30 per annum effective) for 10 years.

4. Pension is payable at the end of each period, during the policy term of 10 years, as per the frequency of monthly, quarterly, half-yearly, yearly as chosen by the pensioner at the time of purchase.

5. There is a minimum and maximum limit for investment in Pradhan Mantri Vaya Vandana Yojana Scheme and the amount varies according to the pension payment mode chosen.

6. The below table elaborates all the payment modes and its prices:

{mosimage}

7. Loan up to 75 per cent of purchase price shall be allowed after 3 policy years to meet the liquidity needs, said the Finance Ministry.

8. Loan interest will be recovered from the pension instalments and loan to be recovered from claim proceeds, it said, adding the scheme also allows for premature exit for the treatment of any critical or terminal illness of self or spouse.

9. On such premature exit, 98 per cent of the purchase price will be refunded.

10. On death of the pensioner during the policy term of 10 years, the purchase price will be paid to the beneficiary.

(PTI inputs)