New 8% PMVVY Pension Plan Released: Here’s Everything You Need to Know

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The long-awaited pension plan – Pradhan Mantri Vaya Vojana Yojana – for people over 60 years of age or older released earlier this week. Prime Minister Narendra Modi had announced the plan on New Year’s Eve exclusively for the elderly.

The pension scheme is offered by Life Insurance Corporation of India (LIC). In this scenario of declining interest rates, where banks are trimming their deposit rates and interest rates of small savings plans are at a record level, experts believe it will provide the elderly of 60 years or more an alternative in sight. Here is everything you need to know about the scheme.

1. Under this scheme, there will be a guaranteed yield of 8 percent over a ten-year holding period. If there is a deficit between the real gain under the scheme and the guaranteed yield of 8 percent then the government will subsidize the LIC for this.

2. LIC started offering the pension plan from 4 May 2011 and will remain open for the next year.

3. One can invest in the pension plan through online and offline mode.

4. According to the scheme, the investor will have the option to choose between the mode of payment: monthly, quarterly, semi-annual and annual. There is a minimum and maximum limit on the amount of the investment depending on the chosen pension mode. For example, if a person chooses to receive the minimum pension available under the scheme (Rs 1,000 per month), then he will have to invest Rs 1.5 lakh, but if the person chooses to receive Rs 12,000 annually, then Rs 1,44,578 will have to Be inverted.

5. Premature withdrawal of the plan is possible in case the money is necessary for the treatment of a terminal or critical illness of the person or the spouse. In this case, 98 percent of the amount invested will be refunded.

6. In case of death of the pensioner during the validity of the policy of 10 years, the purchase price will be returned to the beneficiary.

7. At maturity, the pensioner will recover the amount invested together with the last pension quota.

8. You can also avail a loan of up to 75 percent of the amount invested after three years.

9. With interest rates going down, this will be a good option. Since the plan will be open for one year from the launch date, it will be advisable to wait and see during the year whether the Reserve Bank of India reduces additional fees or not and then decides to invest if interest rates go down More, “said Manoj Nagpal, CEO, Outlook Asia Capital.

10. “Considering that the interest rate is falling, it may not be a bad idea for senior citizens, especially those who fall in the lower tax bracket. But since interest income will be taxable, those who Fall in the higher tax range can also look at options such as tax-free bonds, “said Anil Rego, CEO and founder of Right Horizons.Bu