20-May-2020: Cabinet approves extension of ‘Pradhan Mantri Vaya Vandana Yojana’
The Union Cabinet, chaired by the Prime Minister Shri Narendra Modi, has given its approval to the following for the welfare of and to enable old age income security for Senior Citizens:
- Extension of Pradhan Mantri Vaya Vandana Yojana (PMVVY) up to 31st March, 2023 for further period of three years beyond 31st March, 2020.
- To allow initially an assured rate of return of 7.40 % per annum for the year 2020-21 per annum and thereafter to be reset every year.
- Annual reset of assured rate of interest with effect from April 1st of financial year in line with revised rate of returns of Senior Citizens Saving Scheme (SCSS) upto a ceiling of 7.75% with fresh appraisal of the scheme on breach of this threshold at any point.
- Approval for expenditure to be incurred on account of the difference between the market rate of return generated by LIC (net of expenses) and the guaranteed rate of return under the scheme.
- Capping Management expenses at 0.5% p.a. of funds of the scheme for first year of scheme in respect of new policies issued and thereafter 0.3% p.a. for second year onwards for the next 9 years.
- Delegating the authority to Finance Minister to approve annual reset rate of return at the beginning of every financial year.
- All other terms and conditions of the scheme remaining the same.
The minimum investment has also been revised to Rs.1,56,658 for pension of Rs.12,000/- per annum and Rs.1,62,162/- for getting a minimum pension amount of Rs.1000/- per month under the scheme.
Financial implications: Government's financial liability is limited to the extent of the difference between the market return generated by LIC and the guaranteed return of 7.40% per annum initially for the year 2020-21 and thereafter to be reset every year in line with SCSS. The expenses on managing the scheme, are capped at 0.5% of assets under management per annum for the first year of the scheme and 0.3% p.a. for second year onwards for the next nine years. As such the expected financial liability v/ill range from an estimated expenditure of Rs. 829crore in the financial year 2023-24 to Rs. 264crore in last FY 2032-33. The average expected financial liability for the subsidy reimbursement, calculated for annuity payment on actual basis is expected to be Rs. 614 crore per year for currency of the scheme. The actual interest-gap (subsidy) would however depend upon the actual experience in terms of number of new policies issued, the quantum of investment made by subscribers, actual returns generated and the basis of annuity payment.
PMVVY is a social security scheme for senior citizens intended to give an assured minimum pension to them based on an assured return on the purchase price / subscription amount.
26-Dec-2019: Aadhaar made mandatory for PMVVY pension scheme
Central government has made Aadhaar mandatory for senior citizens who are the subscribers of the Pradhan Mantri Vaya Vandana Yojana (PMVVY).
Implemented through Life Insurance Corporation of India (LIC), the PMVVY scheme was announced in Union Budgets of 2017-18 and 2018-19.
The notification was released last week under the Aadhaar (Targeted Delivery of Financial and Other Subsidies, Benefits and Services) Act, 2016.
The notification further stated that any senior citizen, who wants to avail benefit of the scheme and does not possess the Aadhaar number or has not yet been enrolled for Aadhaar, should quickly apply for Aadhaar enrolment before registering for the scheme. In case they are not able to enroll their Aadhaar because of poor biometrics, the ministry’s Department of Financial Services through its implementing agency will make provisions to help the beneficiaries get the Aadhaar number.
If the beneficiaries are not able to get their biometric or Aadhaar one-time password or time-based OTP authentication, they can give a physical Aadhaar letter whose authenticity can be verified through the quick response (QR) code printed on the Aadhaar letter.
2-May-2018: Cabinet approves Doubling of Investment Limit for Senior Citizens from Rs. 7.5 lakh to Rs.15 lakh under Pradhan Mantri Vaya Vandana Yojana (PMVVY)
The Union Cabinet has given its approval for extending the investment limit from Rs 7.5 lakhs to Rs 15 lakhs as well as extension of time limits for subscription from 4th May 2018 to 31st March, 2020 under the Pradhan Mantri Vaya Vandana Yojana (PMVVY) as part of Government's commitment for financial inclusion and social security.
Further, as a boost to the Social Security initiatives for senior citizens, the investment limit of Rs 7.5 lakh per family in the existing scheme is enhanced to Rs 15 lakh per senior citizen in the modified PMVVY, thereby providing a larger social security cover to the Senior citizens. It will enable upto Rs.10000 Pension per month for Senior Citizens.
As of March, 2018, a total number of 2.23 lakh senior citizens are being benefited under PMVVY. In the previous scheme of Varishtha Pension Bima Yojana-2014, a total number of 3.11 lakh senior citizens are being benefited.
Background: The PMVVY is being implemented through Life Insurance Corporation of India (LIC) to provide social security during old age and protect elderly persons aged 60 years and above against a future fall in their interest income due to uncertain market conditions. The scheme provides an assured pension based on a guaranteed rate of return of 8% per annum for ten years, with an option to opt for pension on a monthly / quarterly / half yearly and annual basis. The differential return, i.e. the difference between the return generated by LIC and the assured return of 8% per annum would be borne by Government of India as subsidy on an annual basis.