PMVVY a government-guaranteed pension scheme

Pradhan Mantri Vaya Vandana Yojana

The Pradhan Mantri Vaya Vandana Yojana (PMVVY), which is a fixed return pension scheme for senior citizens, is ending from March 31st, 2020. It is a ten-year pension scheme, with the option of withdrawing income at regular intervals such as monthly, quarterly, half-yearly or yearly. The scheme has an upper cap for investment and pension which an investor can draw. The maximum investment allowed under PMVVY scheme is Rs.15 lacs, whereas the maximum monthly pension which can be drawn by an individual is limited to Rs. 10,000. It is noteworthy that the age of an investor is not a barrier under this scheme, i.e. an individual who doesn’t qualify to be a senior citizen can also invest under this scheme. 

Where can I invest under PMVVY scheme? 

LIC has a whole and sole right for offering investment under PMVVY scheme. You can fill the application form online or offline method, after careful review of the scheme which suits your requirement and tax slab. 

How to calculate pension for my investment under PMVVY?

The pension which you may receive at a chosen interval, i.e. monthly, quarterly, half-yearly or annually, depends on the applicable “sample pension rate (SPR)”. The pre-defined SPRs per Rs 1000 of the purchase price are given as under:

  • For annual pension, SPR is Rs. 83 per annum.
  • For half-yearly pension, SPR is Rs. 81.30 per annum.
  • For quarterly pension, SPR is Rs. 80.50 per annum.
  • For monthly pension, SPR is Rs. 80 per annum.

Once you know the SPR for your investment, you can calculate pension under PMVVY as per the formula: PMVVY = (Investment*SPR)/1000. For example, say you have invested Rs. 10 lakhs under PMVVY, then your monthly pension will be: (1000000*80)/1000, which is Rs. 6667 per month. 

How to calculate return on my investment?

Again, based on the interval of pension chosen, the return on investment under PMVVY will vary. For example, if you choose an annual pension option then the annual rate of interest offered to you is 8.3%. Similarly, the annual rate of interest(s) offered for half-yearly, quarterly and monthly pension options is 8.13%, 8.05%, and 8% respectively.

Is there a cap on minimum or maximum investment under PMVVY?

Yes, the minimum and maximum investment under PMVVY is capped. The amount invested, also called the “Purchase Price”, has lower and upper limits; again, depending on the interval of pension which you choose. The following table gives the upper and lower cap for the purchase price, given different intervals of pension:

  • For yearly pension, the minimum and maximum permissible purchase prices are Rs. 1,44,578 and Rs. 14,45,783 respectively.
  • For half-yearly pension, the minimum and maximum permissible purchase prices are Rs. 1,47,601 and Rs. 14,76,015 respectively.
  • For quarterly pension, the minimum and maximum permissible purchase prices are Rs. 1,49,068 and Rs. 14,90,683 respectively.
  • For monthly pension, the minimum and maximum permissible purchase prices are Rs. 1,50,000 and Rs. 15,00,000 respectively.

What are the minimum and maximum pension you can get under PMVVY?

Based on the Purchase price, SPR and interval of pension chosen, the minimum and maximum possible pension under PMVVY are as under:

  • The minimum and maximum possible monthly pension are Rs. 1,000 and Rs. 10,000.
  • The minimum and maximum possible quarterly pension are Rs. 3,000 and Rs. 30,000.
  • The minimum and maximum possible half-yearly pension are Rs. 6,000 and Rs. 60,000.
  • The minimum and maximum possible annual pension are Rs. 12,000 and Rs. 1,20,000.

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