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Pradhan Mantri Vaya Vandana Yojana

Aadish Jain_JudicateMe


This Blog is written by Aadish Jain from Symbiosis Law School, NoidaEdited by Ritika Sharma.



The Scheme has been in the news as the tweet of the Principal Director General of the Press Information Bureau K.S Dhatwalia has been flowed which tells that “Cabinet approves the extension of ‘Pradhan Mantri Vaya Vandana Yojana’ up to 31st March, 2023 for the further period of three years beyond 31st March 2020; This to enable old-age income security and welfare of Senior Citizens”.

Pradhan Mantri Vaya Vandana Yojana (PMVVY) was propelled in May 2017 to give a drawn-out salary alternative for senior citizens of the nation. This accept significance in the wake of the low-financing cost situation we wind up in. Fixed stores are getting restored at lower rates. This stances issues to those senior residents who depend on intrigue salary that is interest on the income to meet standard costs.

Basically, Pradhan Mantri Vaya Vandana Yojana is an insurance or a protection policy cum-pension scheme that gives elective paths of income to senior citizens of the nation. Sponsored by the Indian Government, this annuity plan obliges ones’ requirement for post-retirement money related arranging under National Savings Schemes. It is a pension annuity plan for senior citizen oversaw and worked by Life Insurance Corporation (LIC). The plan accommodates a guaranteed return of 8% percent per annum payable month to month (comparable to 8.3% per annum) for 10 years. In any case, the endorser can settle on month to month/quarterly/half-yearly or yearly instalment of the benefits apart form it the plan additionally also offers a death benefit as in return of purchase price to the nominee of the person who died.

The past PMVVY (with 8% p.a. pace of intrigue) lapsed on March 31, 2020. The Government of India has expanded the PMVVY conspire until March 31, 2023 with a couple of changes to financing costs. This change doesn’t influence policy takers who had contributed at the very latest March 31, 2023. They will get 8% p.a. until the maturity period (10 years). The change will apply to the new endorsers of PMVVY. On the off chance that you apply in this budgetary year (April 1, 2020-March 31, 2021), you will procure 7.4% p.a. Also, you will earn this interest for the following 10 years.

Do note, despite the fact that the Government has broadened the plan until March 31, 2023, the Government will choose the interest rate each year (much as it does little investment funds conspires each quarter).


Gives financial security through the pension payment:

Under Pradhan Mantri Vaya Vandana Yojana, people who have profited this benefits plan are permitted to get a fixed sum toward the finish of a specific period picked by a person for the most extreme term of 10 years.

Guarantee of Return:

Yearly reset of the guaranteed pace of interest with impact from April first of money related year in accordance with the updated pace of profits of Senior Citizens Saving Scheme (SCSS) up to a cap of 7.75% with a new evaluation of the plan on the break of this edge anytime.

Can opt for pay-out according to convenience:

As the scheme holder can opt for the periodically pay-outs like monthly, ones in three months, or twice in a year according to the convenience. Only the first installment of the payment must be done immediately after the scheme has been purchased by an individual.

Benefits after death:

PMVVY as the individual died during the period of the policy terms then his/her beneficiary is fully entitled to receive the entire purchase amount which has been paid as a claim on submitting required documents.

Maturity Benefits:

Pradhan Mantri Vaya Vandana Yojana additionally accompanies the development advantage of accepting a singular amount price tag of the arrangement alongside the last installment pay-out. This office is legitimate on the endurance of a retired person until this strategy policy terms end.

At the time of exclusion:

So, if the policyholder commits suicide then the entire purchase price has to be paid by the nominee of under the scheme which makes this pension cum insurance scheme such a unique exclusion.

Surrendering Value of the Policy:

The Scheme allows the pensioner to surrender the policy in middle before the maturation period of the policy if the policyholder need a monetary requirement to avail a treatment of critical illness for himself or spouse then the policyholder can receive the 98% of the purchase value as per the terms of the policy of premature exit.

Free time to Lock the Scheme:

There is a free lock-in period for the policy if on the off chance that people are not happy with the terms and conditions referenced in the policy agreement, then they are permitted to restore this scheme within 30 days from the date of receipt in the event of the online buy. However, the free lock-in period for disconnected buy is 15 days beginning from scheme buy date. An explanation behind complaint or the restoration should like-wise be encased while restoring this strategy. Then the entire purchasing amount should be reimbursed after deducting the amount of any applicable stamp duty.

Loan Facility:

In the wake of finishing 3 effective policy years, people can avail loans against a Pradhan Mantri Vaya Vandana Yojana venture. Retired people can acquire a limit of 75% of the buy sum as an advance. Interest determined on credit is recuperated from the benefits installment according to the picked recurrence of advance reimbursement. The interest payable gets due on the benefits installment date. Moreover, during development or give up, advance remarkable will be recouped from its case sum.

The Scheme is exempted from Goods and Service Tax.


Section – 45 of the Insurance Act, 1938

The provision of Section 45 of the Insurance Act, 1938 shall be as amended from time to time. The simplified version of this provision is as under: Provisions regarding policy not being called into question in terms of Section 45 of the Insurance Act, 1938, as amended by Insurance Laws (Amendment) Act, 2015 are as follows:

1) No Policy of Life Insurance will be brought being referred to on any ground at all after the expiry of 3 years from a. the date of issuance of strategy or b. the date of the beginning of hazard or c. the date of restoration of strategy or d. the date of rider to the approach whichever is later.

2) On the ground of extortion, an arrangement of Life Insurance might be brought being referred to inside 3 years from a. the date of issuance of strategy or b. the date of the beginning of hazard or c. the date of restoration of strategy or d. the date of rider to the strategy whichever is later.

3) Misrepresentation implies any of the accompanying demonstrations submitted by protected or by his specialist, with the goal to delude the guarantor or to instigate the safety net provider to give a disaster protection strategy:

4) The proposal, as a reality of that which isn’t accurate and which the protected doesn’t accept to be valid;

5) The dynamic disguise of reality by the protected having information or conviction of the reality;

6) Some other demonstration fitted to hoodwink; and

7) Any such demonstration or exclusion as the law explicitly pronounces to be fake.

8) Unimportant quietness isn’t misrepresentation except if, contingent upon conditions of the case, it is the obligation of the safeguarded or his operator keeping quiet to talk or quietness is in itself comparable to talk.

9) No Insurer will deny a disaster protection Policy on the ground of Fraud if the Insured/recipient can demonstrate that the misquote was consistent with the best of his insight and there was no purposeful expectation to stifle the reality or that such mis-proclamation of or concealment of material certainty is inside the information on the backup plan. The onus of negating is upon the policyholder, if alive, or recipients.

10) Extra security Policy can be brought being referred to inside 3 years on the ground that any articulation of or concealment of a reality material to hope of a life of the protected was mistakenly made in the proposition or other record premise which strategy was given or resuscitated or then again rider gave. For this, the backup plan ought to convey recorded as a hard copy to the protected or lawful agent or candidate or chosen ones of guaranteed, as material, referencing the ground and materials on which choice to deny the approach of extra security is based.

11) In the event that renouncement is on the ground of mis-explanation and not on extortion, the premium gathered on strategy till the date of disavowal will be paid to the safeguarded or legitimate delegate or candidate or chosen ones of protected, inside a time of 90 days from the date of renouncement.

12) The truth will not be viewed as a material except if it has an immediate bearing on the hazard embraced by the guarantor. The onus is on the guarantor to show that if the safety net provider had known about the said truth, no extra security strategy would have been given to the safeguarded.

13) The backup plan can call for verification old enough whenever on the off chance that he is qualified for do as such and no arrangement will be considered to be brought being referred to just on the grounds that the provisions of the strategy are balanced on resulting verification old enough of life safeguarded. Thus, this Section won’t be pertinent for addressing age or alteration dependent on verification old enough submitted in this way.

Prohibition of Rebates, Section – 41 of Insurance Act, 1938 as amended by the Insurance Law (Amendment) Act, 2015:

1) No individual will permit or offer to permit, either legitimately or in a roundabout way, as an actuation to any individual to take out or recharge or proceed with a protection in regard of any sort of hazard identifying with lives or property in India, any discount of the entire or part of the commission payable or any refund of the premium appeared on the arrangement, nor will any individual taking out or restoring or proceeding with an approach acknowledge any discount, aside from such discount as might be permitted as per the distributed outlines or tables of the backup plan: gave that acknowledgment by a protection specialist of commission regarding a strategy of disaster protection taken out without anyone else on his own life will not be considered to be acknowledgment of a refund of premium inside the importance of this sub-area if at the hour of such acknowledgment the protection operator fulfils the endorsed conditions building up that he is a bonafide protection operator utilized by the safety net provider.

2) Any individual creation default in conforming to the arrangements of this area will be at risk for a punishment that may reach out to ten lakh rupees.


PM Vaya Vandana Yojana was launched in May 2017 to provide the pension for senior citizen in the country so LIC (Life Insurance Corporation of India) came up with the PMVVY with an assured interest rate of 8% for 10 years and further the scheme has been extended by the government by multiple times and recently the scheme has been extended by 3 years and it brings up the changes to the scheme.

On the off chance that you apply in this financial year (April 1, 2020-March 31, 2021), you will be provided 7.4% p.a. Furthermore, the Government has indicated that the loan fee for PMVVY will be along the lines of SCSS (financing cost of SCSS as on May 21, 2020: 7.4% p.a.). The pace of enthusiasm for PMVVY is additionally topped at 7.75% p.a. This top will be returned to standard spans. To be honest, I don’t comprehend the requirement for a top. As I see, PMVVY is currently simply like SCSS with 10-year development and loan cost lock-in. As the minimum monthly pension has been set to ₹1000 and that of annually of ₹12,000.

So, when we think about the PMVVY one of the existing schemes which seek the attention is Senior Citizen Saving Scheme (SCSS) previously SCSS is providing a slightly higher interest rate of 8.3% p.a. but currently both the scheme provides the same rate of interest of 7.4% p.a. so there is no such preference of the new scheme now the only difference between both these schemes is with the respect change of interest rate as SCSS interest can be changed quarterly and PMVVY interest rate changes every year.

In SCSS the locking period of the interest rate in policy is 5 years after that the holder has to renew the policy o9n present prevailing rates only but in PMVVY the policyholder can lock the interest rate for 10 years.

There is no benefit of tax under PMVVY but with SCSS we can get tax benefit under Section 80C of Income Tax Act. Other than that, in PMVVY the holder can invest a total of 30 lacs in the policy.

So here we can draw an inference that PMVVY is a simple and easily understandable product if we compare it to normal banks. The scheme provides a much better interest rate than any normal fixed deposit at Normal bank other than that you can lock the interest rate for 10 years. Apart from all this the scheme has its own disadvantages like the scheme is not an annuity product Along these lines, you don’t secure in the financing cost forever. You do it just for a long time. Following 10 years, if the plan is still on offer, the financing cost offered might be the route not quite the same as 7.4% p.a. So, there is a maximum of Rs 15 lacs cap for each senior citizen in the policy. Accordingly, the quantum of pay from this plan is topped.

You can’t get to cash aside from in the event of genuine sicknesses. There is an office of credit following 3 years yet I wouldn’t go that far. I don’t prefer to pay to get to my own cash. Also, there is taxable income. Powerful returns can be low for speculators in the most noteworthy personal duty section.

Hence, from analyzing both the positive and negative aspects of the scheme in the researcher’s opinion, the people who are in their early 60s can opt for the PMVVY because after 10 years they can consider an annuity plan without return of price at which the policy is purchased to create a decent degree of income.


In view of the achievement and ubiquity of Varishtha Pension Bima Yojana 2003 (VPBY-2003), Varishtha Pension Bima Yojana 2014 (VPBY-2014) plans, and to ensure older people matured 60 years or more against a future fall to their greatest advantage pay because of the questionable economic situations, as additionally to give government disability during mature age, it is chosen to dispatch a rearranged plan of guaranteed annuity of 8% called the ‘Pradhan Mantri Vaya Vandana Yojana’. ‘Pradhan Mantri Vaya Vandana Yojana’ is being actualized through Life Insurance Corporation (LIC) of India. According to the plan, on an instalment of an underlying singular amount sum running from a base price tag of Rs. 1, 50,000/ – for a base annuity of Rs 1000/ – every month to the greatest price tag of Rs. 7, 50,000/ – for most extreme annuity of Rs. 5,000/ – every month, endorsers will get a guaranteed benefits dependent on an ensured pace of return of 8% per annum, payable month to month.







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