Pradhan Mantri Vaya Vandana Yojana (PMVVY)
PMVVY is an Open-ended Deferred Pension Plan. The scheme offers guaranteed return of 8% per annum for 10 years. Minimum pension amount is Rs. 1,000/ month and maximum pension amount is Rs. 10,000/ month depending on purchase price. Returns will be paid on a monthly basis. On maturity, the entire pension wealth will be paid in lump sum and no annuity will be offered thereafter by the Pension Fund Regulatory and Development Authority (PFRDA). The first installment of 5% or 50% whichever is lower is payable within 2 years from the time when account balance reaches Rs 1lakh/- which will happen after completion of 10th year under this scheme i.e before 2040s for most of us today!
PMVVY is an Open-ended Deferred Pension Plan
PMVVY is an open-ended deferred pension plan that provides guaranteed return of 8% per annum for 10 years. The scheme offers minimum pension amount of Rs. 1,000/ month and maximum pension amount of Rs. 10,000/ month depending on purchase price.
It was launched by the Finance Ministry in June 2019 as part of Pradhan Mantri Vaya Vandana Yojana (PMVVY).
The scheme offers guaranteed return of 8% per annum for 10 years. This is a fixed rate of 8%, which means that you will get the same amount every year. The return is guaranteed for the entire tenure of 10 years, even if interest rates go up or down during this period.
The minimum pension amount is Rs. 1,000/ month and maximum pension amount is Rs. 10,000/ month depending on purchase price.
On maturity, the entire pension wealth will be paid in lump sum and no annuity will be offered thereafter by the Pension Fund Regulatory and Development Authority (PFRDA).
However, if you are a member of PMVVY Scheme and have converted your PF account into PSF account after 1st April 2018 then you can continue with your existing plan as per rules of PMVVY Scheme.
Premiums and investments.
PMVVY is an open-ended deferred pension plan. The scheme offers guaranteed return of 8% per annum for 10 years, with a maximum payout of Rs 1 lakh per annum.
All senior citizens can purchase the scheme online or offline from any bank or post office by submitting their Aadhaar number and PAN card along with an application form. One can also apply for PMVVY in person at any of the designated branches across India through a process called self-enrolment where you need to provide your Aadhaar number, PAN card number and name along with other documents as required by banks/post offices concerned.
There are 52 Life Insurance companies such as LIC, MetLife India Insurance Company Limited etc in India which have tied up with PFRDA for this scheme.
List of companies:
- Aamratree Life Insurance Company Ltd (AILCL)
- Aditya Birla Financial Services Ltd (ABFSL)
- Aegon General Insurance Company Limited (AGICL)
- American International Group Inc. (AIG), New York City USA
Age criteria for the scheme
The age criteria for the PMVVY has been relaxed by 2 years – the applicant should be minimum 60 years old as compared to 62 years in case of SCSS. The scheme will provide an additional amount of Rs 1,000 per month on top of your pension from Employees’ Provident Fund Organisation (EPFO).
The Pradhan Mantri Vaya Vandana Yojana (PMVVY) is open only for those who are not covered under any other pension scheme.
What is the maximum investment limit?
As compared to the upper limit of Rs 15 lakhs in the SEWA Credit Scheme, PMVVY has a much lower limit of investment. The amount of investment is limited to Rs 15 lakhs as compared to Rs 15 lakhs in SCSS.
Is it possible to switch to another scheme?
However, one can not switch from any other pension scheme to PMVVY. You can not buy a new PMVVY plan if you have already bought a SCSS plan or an NPS.
If you are already enrolled under any of the above-mentioned schemes, then you will continue to get benefits under those schemes as well, but with additional features like:
- An option to invest in fixed income instruments like bonds and money market funds;
- A higher guaranteed interest rate on deposits than what was available earlier.
Under this scheme, the pension will be payable at periodical intervals of monthly or quarterly or half-yearly or yearly as opted by the pensioner at the time of purchase of the plan. If you wish to opt for monthly payment, then you need to pay Rs 1 per month from your bank account or credit card account and get an SMS alert on your mobile phone with details about your pension amount being debited from your bank account/credit card on each date.
PMVVY is an excellent scheme for senior citizens who want to save money and invest it in a secure and reliable way. It offers guaranteed 8% per annum return over 10 years, which is far more than the interest rate offered by most banks. But, if you take a look at the current market trends, it is much more profitable to invest in commercial real estate than in these traditional savings schemes. Try out Assetmonk impressive offerings for both commercial and residential real estate investment opportunities.