A to Z of Pradhan Mantri Vaya Vandana Yojana for Senior Citizen

A to Z of Pradhan Mantri Vaya Vandana Yojana for Senior Citizen

The finance minister Mr. Arun Jaitly in his budget speech (2017-18) had announced about a scheme to help the senior citizen.

The Life Insurance Corporation of India (LIC of India)  has launched a scheme to give effect to the announcement made by the finance minister on 4th May May 2017.

The scheme name is Pradhan Mantri Vaya Vandana Yojana This scheme is available for a period of one year till 3rd May 2018.

This scheme guarantees the senior citizen a guaranteed fixed pension at  8% for 10 years.

This rate of guaranteed pension of 8% offered looks very attractive.
 This scheme can be purchased online as well as offline.

Pension Plan & Annuity

This is basically a pension plan with return of capital sum earning you an annuity ranging from Rs. 1,000 per month to Rs. 5,000 per month.

Under the PMVYY you have the option to receive the annuity at monthly, quarterly, half yearly or yearly interval. Depending on payment frequency chosen by you, you need to deposit the money with LIC.

 The table below gives you the amount of money to be deposited and the amount of annuity which you will be entitled to receive.

Premature withdrawals & withdrawal on maturity

Under this scheme you are normally not allowed to withdraw the purchase price paid by you before completion of 10 years.

However in exceptional circumstances like for treatment of terminal illness or /  critical illness of the spouse or / the self, you are allowed to withdraw the money but you will get only 98% of the purchase price on such surrender.

 However on completion of the term of 10 years you will get back the full price which is not taxable in your hand at the time of the receipt.

Loan against the Policy

The scheme provides for the facility to take loans upto 75% of the purchase prices after completion of three (3) years from commencement of the policy.

The rate of interest applicable on such loans be declared from time to time and for the current year it is 10% payable half yearly. The amount of interest shall be recovered from the pension amount due to you.

The amount of loan if not repaid earlier shall be adjusted against the principal amount payable whether at the time of maturity or at the time of premature withdrawal.

Income Tax

Unlike the Senior Citizen Savings Scheme (SCSS) where you get the income tax benefit for deposits made in the account, no tax benefits are available at the time of making the investments.

Moreover the annuity received is taxable in your hand and is taxed at the slab rate applicable to you.


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