Pradhan Mantri Vaya Vandana Yojana (PMVVY) - Guaranteed Pension Scheme

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The Government of India launched the Pradhan Mantri Vaya Vandana Yojana (PMVVY) in the year of 2017. This scheme is only for senior citizens of India or retired personnel whose age is 60 years or above. The PMVVY is a guaranteed pension scheme over a one-time investment. This policy brings relief to senior citizens to invest the lump sum amount in a secure and trustworthy scheme. After the investment, the interest is paid on a monthly/ quarterly/ half-yearly/ yearly basis in the form of a fixed pension. 

As of now, the Pradhan Mantri Vaya Vandana Yojana is managed and maintained by the Life Insurance Corporation of India (LICI). An individual can only subscribe to the PMVVY scheme from LICI as a policy. The account holder can also add a beneficiary. After the maturity on the survival of the policyholders receives the initial invested amount.

The initial closing of PMVVY was in March 2020. However, the Government of India has announced to continue this scheme until March 2023. The current rate of interest of PMVVY is approx 7.4% per month and 7.66% per annum for the investments made between the financial year April 2020- March 2021. The interest rate is revised by the Government for each financial year.

Tenure and investment limit under PMVVY

PMVVY offers 10 years guaranteed fixed pension. The maximum amount that can be invested in this scheme is Rs. 15 lakh. Before maturity, the subscriber can withdraw 98% of his/her investment.

Mode of Purchase 

PMVVY can be purchased either offline or online mode. As of now, an individual can purchase this policy/ scheme only from LICI. To get this policy an individual needs to visit a branch of a LICI. The online subscription can also be created from LICI's online portal. For an online subscription, the subscriber needs to have a mobile linked AADHAAR number for online KYC.

Pension options under Pradhan Mantri Vaya Vandana Yojana (PMVVY)

The policyholder can choose a pension payment interval from monthly, quarterly, half-yearly, or annually. The first installment starts after one month, three months, six months, and one year from the purchase date of the policy according to the opted pension interval. There are some limits in pensions that are the following:

• Rs.1,000 to 10,000 / Month
• Rs.3,000 to 30,000 / Quarter
• Rs.6,000 to 60,000 / Half-year
• Rs.12,000 to 1,20,000 / Annum

Investment options under Pradhan Mantri Vaya Vandana Yojana (PMVVY)

The investment range of the policy can be changed based on opted pension intervals. The range of investments are the following:

Eligibility criteria of PMVVY

To apply for the PMVVY scheme, an individual must meet the following criteria

• The minimum entry age should be above 60 years.
• No upper limit of age to open an account.
• Must be a citizen of India.
• Both the subscriber and spouse can avail to open an account. 

Key features of PMVVY

Some key benefits of Pradhan Mantri Vaya Vandana Yojana are:

• The PMVVY is a pension scheme and offers a fixed amount of pension for 10 years.
• An individual can choose a pension option from monthly, quarterly, half-yearly, or yearly.
• The rate of interest is fixed for the lifespan of the policy.
• In case of the death of the policyholder before the completion of 10 years, the beneficiary will receive the initial invested amount.
• Because of any critical illness of the policyholder or the spouse, the policy can be closed. In this case, a maximum of 98% of the investment will be refunded.
• On completion of 10 years, the policy will be closed and the invested amount will be refunded to the policyholder.
• The loan facility is available under the PMVVY scheme. One can apply for a loan after the completion of 3 years from the opening date of the purchase of the policy. The maximum loan that can be availed of is 75% of the investment.
• In case the subscriber commits suicide, then the total invested amount will be returned to the beneficiary.
• Offline and online investors can withdraw the policy within 15 days and 30 days respectively. 

Required documents are needed for opting PMVVY scheme

Multiple documents can be required to purchase the PMVVY scheme. The list of documents are:

• PMVVY Application from
• Aadhaar card
• Proof of address
• Proof of Identity
• Passport size photograph
• Bank details where the pension will be credited
• A canceled cheque of a savings account/ to be pension account can be required for NEFT.

How to purchase Pradhan Mantri Vaya Vandana Yojana (PMVVY)?

An individual can purchase the PMVVY scheme as a policy from the Life Insurance Corporation of India. This policy can be purchased both in offline and online mode. 

Offline mode

To purchase the PMVVY scheme you need to collect the application form of PMVVY and submit it to any branch of LICI along with the supporting documents. On payment over cash, you will receive the policy document instantly. In case of payment made by cheque, the delivery of the policy document might take some days due to the clearance of the cheque.

Online mode/ How to purchase PMVVY policy online?

PMVVY can be purchased online. The steps of purchasing PMVVY online are the following:

1. Visit the LICI website https://www.licindia.in/ or visit LIC's online sales portal
2. Next click on the 'Buy Online' button under "856 -Pradhan Mantri Vaya Vandana Yojana”. The portal will ask you for some details like name, phone, email, etc. to proceed with the access registration.
3. On successful registration, you will receive an Access ID along with the password.
4. After the generation of your Access ID, you need to fill the policy form online.
5. Once you complete the fill-up the application form, AADHAAR verification will be done using SMS OTP.
6. Once your AADHAAR is verified, your payment window will appear and you need to pay using the internet payment gateway.
7. Finally, after completion of payment, an acknowledgment number and the policy number will be sent to your mobile and email.
8. After getting the Policy number, you may download the policy from LICI's customer portal.

Income-Tax benefits under Pradhan Mantri Vaya Vandana Yojana scheme

The PMVVY scheme offers an income tax benefit of Rs. 1.5 lakh under section 80C Income Tax Act. Goods and Service Tax (GST) is also exempted from this policy. This means you don't have to pay GST while purchasing this policy.  However, the pension is taxable and the effective tax will be based on existing Income Tax Laws. 

Premature closure or surrender rules 

Pradhan Mantri Vaya Vandana Yojana permits the subscriber to exit from this policy during the policy term. In case of death of the subscriber or critical illness of self and the spouse, 98% of the investment as the premature withdrawal is allowed.

Spouse benefits

After the death of the policyholder, the spouse will be entitled to the entire invested amount. 

Loan facility

The Pradhan Mantri Vaya Vandana Yojana scheme offers a loan facility. After 3 years of the policy, the policyholder can apply for a loan. One can get a loan facility upto 75% of his/her savings. The loan amount is payable on a half-yearly basis and the interest of the loan will be automatically deducted from the pensions. If the policyholder is unable to pay on the due time, the loan amount will be deducted from the invested amount.

Freelook period

The policy can be returned within the freelook period. If the policyholder is not satisfied, he/ she can return the policy and get a full refund. The Freelook period for an offline policy is 15 days. The policy purchased online gets a freelook period of 30 days. In this circumstance, after deducting the stamp duty charges, the entire deposited amount will be returned to the policyholder.

Some disadvantages of the PMVVY scheme

The Pradhan Mantri Vaya Vandana Yojana is a popular pension scheme for senior citizens. However, this scheme has some drawbacks. 

• The Rate of Interest: The PMVVY scheme is purely a pension policy, and interest does not get compounds. From this perspective, the pension scheme may not beat inflation every time. 
• Tax: The pension is taxable under the scheme.
• Policy Surrender: The surrender of the policy is subject to loose of 2% of the invested amount.

Frequently asked question

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At what age can I subscribe to this policy?

Above 60 years of age, anybody can open an account.

Can the spouse open a different PMVVY account?

Yes, a spouse can open a different PMVVY account.

Maximum how much amount can invest both the subscriber and spouse in the PMVVY policy?

Subscriber 15 lakh and the spouse 15 lakh. A total of 30 lakh can be invested in this scheme.

Is premature closure available under the PMVVY scheme?

Yes, premature closure or policy surrender is allowed in this scheme. 

Can I borrow a loan from this scheme?

Yes, after the age of 3 years of the policy, you can borrow a loan maximum of 75% investment.