PMVVY: Features, Eligibility, Documents Required, Benefits & Steps to Apply

Government of India keeps launching certain social security schemes every now and then to ensure safety and security of senior citizens. Public Provident Fund, Senior Citizen Savings Scheme are some of the schemes that have been functional for years now. 

Another addition to this list is Pradhan Mantri Vaya Vandana Yojana (PMVVY). This scheme also works towards helping senior citizens plan and manage their finances efficiently after retirement. 

Keep reading to learn more details regarding Pradhan Mantri Vaya Vandana Yojana. 

What is the Pradhan Mantri Vaya Vandana Yojana?

Pradhan Mantri Vaya Vandana Yojana (PMVVY) is an insurance policy cum pension scheme backed by the Government of India. Launched in the year 2017, this plan is subsidised by government and provided by Life Insurance Corporation of India which is the largest life insurance provider in India. 

People above the age of 60 can opt for this scheme. Pradhan Mantri Vaya Vandana Yojana objectives include offering guaranteed pension payments at monthly, quarterly, half-yearly or yearly frequency at a specific rate for 10 years.

As it receives the backing of the government, it offers assured returns with an aim to provide social security to senior citizens and protect the elderly against a fall in interest income due to fluctuating markets. 

PMVVY was earlier available from May 04, 2017, to March 31 2020 but recently was extended by government for another three financial years making it applicable till March 31 2023. You can purchase PMVVY by payment of a lump sum which is known as purchase price. 

What are the features of PMVVY?

Let us take a look at the features of Pradhan Mantri Vaya Vandana Yojana:

• Pension payment
  People who avail PMVVY receive a fixed amount of pension at the end of certain period that is chosen by them for a maximum term of 10 years. This acts as an after-retirement financial security plan.
• Maturity benefit
  PMVVY comes with an added advantage of maturity benefit by which you would receive a lump sum of purchase price of the plan along with last instalment payment. However, this facility is valid if the pensioner survives until the end of the policy’s tenure. 
• Periodic payment 
  A beneficiary of this scheme can opt for quarterly, monthly, half-yearly or yearly payments with this plan as per their convenience and financial requirements. When you wish to opt for this scheme, you need to make the first payment immediately after purchasing the plan. 
  If, for example, you have chosen half yearly mode of payment, you will receive your first pension payment after 6 months from the date you have purchased the policy.
• Assured returns
  PMVVY is currently offering an assured return of 7.40% p.a. for the FY 2022-23, which will then reset for the next financial year. Every financial year, the reset rate of return is applicable for April 01 and this is kept in line with the revised rate of return of Senior Citizen Savings Scheme (SCSS).
• Surrender facility
  In case you require money to avail treatment of critical illnesses either for yourself or your spouse, then this scheme allows you to surrender the policy. Policyholders are eligible to receive 98% of the purchase value when they prematurely exit the policy before the end of the tenure.
• Death benefit
  In case of untimely demise of a pensioner during the policy term, their beneficiary will be eligible to receive the entire purchase price when they claim it by submitting requisite documents.
• Exclusions
  This pension cum insurance policy comes with a unique exclusion feature in relation to policy’s purchase price return. In case the policyholder commits suicide, the entire purchase price will be paid back by LIC under this exclusion.
• Loan facility
  You can also avail a loan against your Pradhan Mantri Vaya Vandana Yojana after you complete 3 years of taking the policy. You can take a maximum of 75% of this scheme’s purchase amount as a loan. For this, you do not need to pay any interest as the interest will be recovered from pension which you receive. 
  Interest which you need to pay gets due on your pension payment date. Any loan outstanding after maturity of the policy or in case of surrender will be recovered from the claim amount.
• Free lock-in period
  In case you are not satisfied with the terms and conditions of this policy and do not wish to comply with them, you have the freedom of discontinuing this scheme within 15 days from the date of your receipt in case of offline purchase and within 30 days in case of online purchase. 
  When discontinuing the policy, you also need to enclose a reason for returning. After this, your entire purchase price minus any stamp duty or released pension payment will be refunded back to you within this free lock-in period.

Eligibility criteria of Pradhan Mantri Vaya Vandana Yojana

There are no specific eligibility criteria except that the applicant needs to be a senior citizen who is above the age of 60 and an Indian citizen. There is no maximum entry age as well for this policy-cum-scheme. However, here are some points that you need to keep in mind before opting for this scheme:

• As an applicant, you should be prepared to avail this policy for a tenure of 10 years.
• You should be aware that minimum pension that you can get under this scheme is ₹1,000 per month, ₹3,000 per quarter, ₹6,000 for half-year and ₹12,000 for a year.
• The maximum pension that you can receive under this scheme is ₹10,000 per month, ₹30,000 per month, ₹60,000 for half-year and ₹1,20,000 per year.
• Total purchase price of this scheme is set at ₹15 lakh and should not exceed that amount.

Documents required for PMVVY

Here is the list of all mandatory documents that you required to apply for PMVVY scheme:

• Aadhaar Card
• PAN Card
• Proof of Address like Bank Passbook, Utility Bills, Voter Card, Aadhaar Card, Passport, Driving License
• Proof of Age
• Proof of Income like Salary Certificate, Income Tax Return, Bank Statement etc.
• Passport size Photograph of Applicant
• Self-Cancelled Cheque
• Documents that prove the fact that the applicant has retired from their services

How can you apply for Pradhan Mantri Vaya Vandana Yojana?

People interested to invest in this scheme can buy PMVVY both online and offline from Life Insurance Corporation of India (LIC). 

Here are the steps you can follow if you wish to buy the policy online:

Step 1: Navigate to the official website of Life Insurance Corporation of India.

Step 2: You can either bring your cursor on ‘Buy Online Policies’ and click on it or else click on ‘Click Here’.

Step 3: A new page will open and under the Buy Policy Online header, click on ‘Pradhan Mantri Vaya Vandana Yojana’ option.

Step 4: A new page will open. Click on ‘Click to Buy Online’.

Step 5: A new page will open mentioning the ‘Documents Required’. Take a look at the list and click on ‘Proceed’.

Step 6: Once you are redirected, enter your contact details. After this, click on ‘Proceed’.

Step 7: Fill up the application form that opens on the new page.

Step 8: Submit this form and upload your photograph and signature in JPEG format, self-attested address proof, income proof, PAN card and cancelled cheque in PDF format.

After successful submission of the form and necessary documents, you will be provided with a policy number and an acknowledgement number. 

Steps regarding Pradhan Mantri Vaya Vandana Yojana process that you can follow in case you are purchasing PMVVY offline:

Step 1: Visit the nearest LIC branch office. 

Step 2: Collect the Pradhan Mantri Vaya Vandana Yojana application form. 

Step 3: Fill up the entire form and provide all the requisite details.

Step 4: Submit this application form along with all the relevant documents to the LIC branch office.

After verifying your documents and processing your application request, a LIC agent will start your policy.

How can you check policy details for PMVVY?

You can follow the steps below if you want to check your PMVVY policy details: Step 1: Visit the Umang PMVVY page. Step 2: Under ‘Policy Basic Details’ heading, click on ‘Open’ option. Step 3: A new page will open here. Choose whether you want to ‘Login with MPIN’ or ‘Login with OTP’ option. Step 4: Enter your details like mobile number, MPIN/OTP and click on ‘Login’ option. Step 5: Select the ‘Policy Basic Details’ option under ‘General Services’ heading. Step 6: Provide your ‘Policy Number’, ‘Mobile Number’ and click on ‘View Details’. Step 7: You will be able to view your policy details as they will be visible o your screen.

How can a beneficiary or nominee claim purchase price of PMVVY?

In case of untimely death of the policyholder during policy tenure, a beneficiary or nominee can claim purchase price by informing LIC branch office where the scheme was initiated. 

Nominee or beneficiary needs to submit a claim application along with relevant documents like:

• Death certificate of the policyholder
• Proof of identity of beneficiary or nominee
• Policy documents

After you submit the claim application along with the documents, your request will be processed by LIC, and they will return purchase price of the scheme. However, in case of death due to an accident or unnatural cause, you might need to furnish other documents like a police FIR, hospital record, post-mortem report and medical certificate.

Benefits of investing in PMVVY

Below is a list of all the benefits you can get by opting Pradhan Mantri Vaya Vandana Yojana:

• This scheme provides guaranteed pension as it receives the backing of government.
• You are exempted from GST under this scheme;
• You will receive your pension payment via NEFT or Aadhaar linked payment system.
• This scheme lets you invest a large sum of money between ₹1.5 lakh to ₹15 lakh in order to receive a monthly pension;
• Ceiling of maximum pension has been decided to keep in mind the needs of a family as a whole comprising of pensioner, spouse and dependent children;
• Shortcomings owing to difference between interest guaranteed and actual interest earned as well as expense in relation to administration is subsidised by government and reimbursed to LIC.

Purchase price payment for different periodic payouts under PMVVY

You need to pay a lump sum to purchase the PMVVY policy which is known as purchase price of the scheme. On the basis of this lump sum payment, LIC provides you with a pension for a term of 10 years. After the end of this tenure, the remaining purchase price will be returned to you.

You get to choose the pension payment mode which ranges between monthly, quarterly, half-yearly and yearly as well as the maximum and minimum purchase price for the mode of payment you choose. 

For example, if your purchase price is ₹15 lakh, you will receive a maximum monthly pension of ₹9,250. In case you opt for an annual pension payment of ₹1,11,000, you need to purchase the policy with ₹14,49,086. 

Your pension amount every month, quarter, half-year or year will depend on the rate of interest you invest for 10 years. However, your rate of interest depends on the mode of pension payment you choose. A part of the interest rate is subsidised by government as well. Following is a table of the different rates of interest applicable:

Mode of pension payment under PMVVY

At the time of subscription to this scheme, you can choose your mode of pension payment. It can be monthly, quarterly, half-yearly or yearly. After selecting a mode of pension payment, you cannot change to any other mode during the entire tenure of the policy. 

In order to purchase the policy, it is mandatory for you to have a unique Aadhaar number validation. This is because you will receive your pension through NEFT or an Aadhaar-enabled payment system. This has been done so that policyholders need not visit banks or LIC offices to collect their pension payments.

Taxability of PMVVY

Pradhan Mantri Vaya Vandana Yojana does not offer any tax-saving benefit as it is simply an investment scheme. Senior citizens will receive pension monthly, quarterly, half-yearly and annually according to their investment. 

The returns generated will get added to your taxable income and will be taxed according to the slab in which you qualify.

Even the amount that you contribute does not offer an income tax rebate. You won’t be eligible to claim a deduction under section 80C of Income Tax Act of 1961. Only relief that you receive is that this policy is exempt from Goods and Services Tax in India.

Takeaway

Pradhan Mantri Vaya Vandana Yojana (PMVVY) is an initiative taken by Government of India exclusively for the senior citizens. This scheme offers them a systematic regular pension by investing in an organised and well-planned investment scheme. 

It also offers facilities like flexibility to withdraw without any complicated procedures and availing loans after three years of successfully managing this policy-cum-scheme. All these features make this policy a great customer-friendly scheme.