Lic of India has launched a new guaranteed return pension plan with the collaboration of Ministry Of Finance. During budget 2017-18 the Government has announced Pradhan Mantri Vaya Vandana Yojana (PMVVY) where he has promised to launch a pension scheme with guaranteed return. This plan is available to purchase from LIC of India with 8% return.
This new LIC PM Vaya Vandana Yojana (PMVVY) Plan (Table 842) is launched on 4th May 2017. This plan is available for purchase / subscription with LIC of India till 3rd May 2018. So, almost you have 1 year duration to get this scheme in case you are interested. But before that, spend some time to read the complete review of LIC Pradhan Mantri Vaya Vandana Yojana.
Key Features of Pradhan Mantri Vaya Vandana Yojana
As the policy said, it is a guaranteed return pension plan from Lic of India. Here are few key highlights of this Yojna that you should know before purchase.
* Minimum Age at entry should be 60 Yrs of age and there is no maximum age limit. That means if you are a retired person and want to get regular monthly pension then you can find this scheme interesting.
* You can subscribe this policy for max 10 years only. That means if your age is 60 years, then till 70 years only you will be able to get monthly pension under this scheme.
* The minimum eligible pension amount you can choose from is Rs.1,000/month, Rs.3,000/quarter, Rs.6,000/half-year and Rs.12,000/year. That means it’s actually same amount but you can get as per your preference.
* The maximum monthly pension allowed is only Rs.5,000, quarterly Rs.15,000, half yearly Rs.30,000 and yearly Rs. 60,000. That means if you need more monthly pension, then you may not find this policy interesting.
* The premium payment is one time only, that means this is a single premium paid pension plan. If you want to buy this policy, you have contact your nearest LIC branch or your LIC agent for more information. The buying period is valid from 4th may 2017 to 3rd May 2018.
* This policy can be surrendered in special cases only like pensioner requires money for treatment of any critical/terminal illness of self or spouse. But you will not get the entire amount as surrender value, up to 98% of the purchase price will be paid.
* In case you want loan against your LIC pension plan, you can apply for up to 75% of purchase price after completion of 3 policy year. The interest for the loan will be recovered from the pension amount only.
* This scheme will also provide life cover for the policyholder. In case of natural death or any suicide during the policy term, your nominee will get the complete amount as death benefit.
* In case of survival till the policy end, you will get the purchase price and final pension installment as survival benefit.
* The pension amount as per your selected preference modes will be credited to your bank savings account using NEFT facility or Aadhaar Enabled Payment System.
Why LIC’s Pradhan Mantri Vaya Vandana Yojana is Not The Best Pension Scheme?
Well, you may think that I am against this scheme. But frankly speaking if you analyse few points you will realize why this scheme is not enough to a health pension amount.
Not Enough Pension: The very first point I want to discuss is the maximum pension amount of Rs 5000. If you consider a pension amount of Rs 5000 in current time also, do you think this is enough to live a life at the age of 60 in India? But if you are already getting good pension amount and have enough financial security, but still looking for a guaranteed return of 8% then you may consider this. But still I say that post office Senior citizen scheme is better compared to this.
Entry Age is 60 years: The subscription age for this plan is 60 years onward. I don’t think many people who are in this age range would be interested to start investing for pension products. But as the interest rate is attractive and you have enough money in savings bank account, then you may consider this.
Return Is Not Inflation Adjusted & Tax Free: When we talk about a pension product, it is expected that the pension should fight with the inflation which is rising every year. But this product will not give the inflation adjusted return. Moreover the return is also not tax exempted. That means real return is less than 8%.
Not a Liquid Product: Once you bought this policy, your money will be locked for 10 years. Only on certain special case you can surrender the policy and get the money. So, this policy is also not liquid enough. In the old age, people need huge money inflow due to everyday life medical and healthcare expenses. In such a case, only people with enough financial back up can think about investing the maximum 7,50,000 as single premium to get monthly Rs 5000 as pension.
Don’t take my words wrong, I am sharing my personal views to review this product. This product is backed by Govt of India and LIC of India, that means the 8% guaranteed return and your investment is in the trusted hand only. If you are happy with these then you are most welcome to invest in this product.
Personally I think this policy is almost similar to Atal pension yojna which is launched few years back. Generally people should start saving for retirement or pension much earlier stage in life. For people aged more than 60+ years should concentrate more on monthly income scheme like products or products with good liquidity. I don’t think a life insurance at that age is necessary as generally by that age one should complete all the financial responsibilities.
So, think 10 times and analyse your own how this Pradhan Mantri Vaya Vandana Yojana with 8% guaranteed return will fulfill your financial requirements at the age of 60 years or more. Do share your thoughts or any query by writing a simple comment below.