PMVVY – Pradhan Mantri Vaya Vandana Yojana – Benefits, interest rate, returns calculator in 2023

What is Pradhan Mantri Vaya Vandana Yojana (PMVVY)? What are tax benefit, interest rate, and returns calculator? How to invest in PMVVY?

This post was most recently updated on January 11th, 2023

Govt of India has launched PMMVY / Pradhan Mantri Vaya Vandana Yojana in 2017 based on the success and popularity of Varishtha Pension Bima Yojana 2003 (VPBY-2003), Varishtha Pension Bima Yojana 2014 (VPBY-2014) schemes, and to protect elderly persons aged 60 years and above against a future fall in their interest income due to the uncertain market conditions, as also to provide social security during old age.

As part of the PMVVY / Pradhan Mantri Vaya Vandana Yojana govt of India is assuring higher interest rates for senior citizens which they can utilize for their retirement income. LIC of India is authorized to offer PMVVY / Pradhan Mantri Vaya Vandana Yojana on behalf of Govt of India.

When it was launched in 2017, the interest rate for PMVVY / Pradhan Mantri Vaya Vandana Yojana was set at 8% which was subsequently reduced to 7.4% in 2020 because of the fall in interest rates and for most of the savings scheme across all different savings options.

In 2020, The Government of India introduced PMVVY – Pradhan Mantri Vaya Vandana Yojana, with the modified rate of pension under this plan and extended the period of sale of this plan for a further period of three years from Financial Year 2020-21 till 31st March 2023.

Consider reading – 13 safe investments with high returns

As per the terms and conditions under this plan, guaranteed rates of pension for policies sold during a year will be reviewed and decided at the beginning of each year by the Ministry of Finance, Government of India. For the first financial year i.e. up to 31st March 2023, the Scheme will provide an assured pension of 7.40% p.a. payable monthly.

Pradhan Mantri Vaya Vandana Yojana
PMVVY – Pradhan Mantri Vaya Vandana Yojana

Pradhan Mantri Vaya Vandana Yojana (PMVVY) benefits

The Pradhan Mantri Vaya Vandana Yojana (PMVVY) is a pension scheme offered by the Government of India, which provides a guaranteed monthly pension to senior citizens. The scheme is designed to provide financial security and support to senior citizens during their retirement years. Here are some benefits of the PMVVY:

  1. Guaranteed monthly pension: The PMVVY provides a guaranteed monthly pension to senior citizens, which can help them meet their financial needs and expenses during retirement. The pension amount is based on the investment amount and the policy term, and it is paid out on a monthly basis.
  2. Long-term investment option: The PMVVY is a long-term investment option, with a maximum policy term of 10 years. This can be a good option for those looking for a secure and stable investment for their retirement years.
  3. Tax benefits: The premium paid for the PMVVY is eligible for tax deductions under Section 80C of the Income Tax Act, which can help reduce the overall cost of the investment.
  4. Flexibility: The PMVVY offers flexibility in terms of the investment amount and the policy term, allowing investors to choose the option that best meets their needs.
  5. Security: The PMVVY is backed by the Government of India, which provides a level of security and stability for investment.

Eligibility criteria for Pradhan Mantri Vaya Vandana Yojana (PMVVY)

To be eligible for the Pradhan Mantri Vaya Vandana Yojana (PMVVY), you must meet the following criteria:

  1. Age: You must be at least 60 years old to be eligible for the PMVVY.
  2. Nationality: You must be an Indian citizen to be eligible for the PMVVY.
  3. Investment amount: The minimum investment amount for the PMVVY is INR 1.5 lakh, and the maximum investment amount is INR 15 lakh.
  4. Policy term: The PMVVY has a maximum policy term of 10 years, and the pension is paid out on a monthly basis.
  5. Payment options: The PMVVY offers two payment options: a lump sum payment at the beginning of the policy term, or an annuity payment on a monthly basis.
  6. Documentation: To apply for the PMVVY, you will need to provide proof of identity and age, such as a PAN card or voter ID card. You may also be required to provide other documentation, such as proof of income or a bank statement.

Pradhan Mantri Vaya Vandana Yojana (PMVVY) minimum and the maximum purchase

The scheme can be purchased by payment of a lump sum Purchase Price. The pensioner has the option to choose either the amount of pension or the Purchase Price.

The minimum and maximum Purchase Prices under different modes of pension will be as per below table:

Mode of PensionMinimum Purchase Price Maximum Purchase Price
YearlyRs. 1,56,658/-Rs. 1,449,086/-
Half-yearlyRs. 1,59,574/-Rs. 14,76,064/-
QuarterlyRs. 1,61,074/-Rs. 14,89,933/-
MonthlyRs. 1,62,162/-Rs. 15,00,000/-
PMVVY – Pradhan Mantri Vaya Vandana Yojana minimum and the maximum purchase

The modes of pension payment are monthly, quarterly, half-yearly & yearly. The pension payment shall be through NEFT or Aadhaar Enabled Payment System. The purchase of the policy under this Government subsidized scheme requires unique Aadhaar number validation.

The first installment of the pension shall be paid after 1 year, 6 months, 3 months, or 1 month from the date of purchase of the same depending on the mode of pension payment i.e. yearly, half-yearly, quarterly, or monthly respectively.

Pradhan Mantri Vaya Vandana Yojana (PMVVY) – Returns calculator

The pension rates for Rs.1000/- Purchase Price for different modes of pension payments are as below:

  • Yearly: Rs. 76.60 p.a.
  • Half-yearly: Rs. 75.20 p.a.
  • Quarterly: Rs. 74.50 p.a.
  • Monthly: Rs. 74.00 p.a.

The pension installment shall be rounded off to the nearest rupee. These rates are age-independent.

Pradhan Mantri Vaya Vandana Yojana (PMVVY) surrender value

The scheme allows premature exit during the policy term under exceptional circumstances like the Pensioner requiring money for the treatment of any critical/terminal illness of self or spouse. The Surrender Value payable in such cases shall be 98% of the Purchase Price.

PMVVY loan facility

A loan facility is available after the completion of 3 policy years. The maximum loan that can be granted shall be 75% of the Purchase Price. The rate of interest to be charged for the loan amount shall be determined at periodic intervals.

PMVVY free lock-in period

If a policyholder is not satisfied with the “Terms and Conditions” of the policy, he/she may return the policy to the Corporation within 15 days (30 days if this policy is purchased online) from the date of receipt of the policy stating the reason for objections.

The amount to be refunded within the free look period shall be the Purchase Price deposited by the policyholder after deducting the charges for Stamp duty and pension paid if any.

Taxation on PMVVY

he returns on the scheme are taxable as per the income tax laws in India. The interest earned on the scheme is added to the senior citizen’s income and taxed as per their tax slab.

Deduction U/S 80C of the Income Tax Act can be claimed on the premium paid to purchase the pension plan under PMVVY.

Difference between SCSS and PMVVY

The Senior Citizens Savings Scheme (SCSS) and the Pradhan Mantri Vaya Vandana Yojana (PMVVY) are both pension schemes offered by the Government of India, which provide financial security and support to senior citizens during their retirement years. Here is a comparison of the SCSS and PMVVY:

  1. Investment amount: The SCSS has a maximum investment limit of INR 15 lakh, while the PMVVY has a maximum investment limit of INR 15 lakh.
  2. Interest rate: PMVVY offers an interest rate of 7.4% and SCSS offers an interest rate of 8%.
  3. Policy term: The SCSS has a maximum policy term of 5 years, while the PMVVY has a maximum policy term of 10 years.
  4. Payment options: The SCSS offers a monthly, quarterly, half-yearly, or yearly payment option, while the PMVVY offers a lump sum payment or an annuity payment on a monthly basis.
  5. Tax benefits: Both the SCSS and PMVVY offer tax benefits on the premium paid, with the SCSS eligible for tax deductions under Section 80C of the Income Tax Act and the PMVVY eligible for tax deductions under Section 80TTB.
  6. Investment purpose: The SCSS is primarily intended for retirement planning, while the PMVVY is intended for providing a guaranteed monthly pension to senior citizens.

FAQ on PMVVY – Pradhan Mantri Vaya Vandana Yojana

  1. Is there any tax benefit under PMVVY?

    No there are no tax benefits under 80C if you invest in the PMVVY scheme. Also, the monthly pension that you receive from PMVVY gets added to your total income for the financial year for tax calculations.

  2. Can I invest in both SCSS and PMVVY?

    Yes, you can invest in both SCSS and PMVVY schemes if your age is more than 60 years.

  3. Is TDS deducted on PMVVY?

    No TDS is not deducted from the pension/interest amount that you receive as part of PMVVY investments.

  4. Which is better PMVVY or SCSS?

    As of January 2023, PMVVY offers 7.4% p.a interest which is payable monthly and SCSS offers 7.4% interest but the interest amount is not paid monthly. Looking at this PMVVY is better than SCSS. If you are looking to save tax along with earning a higher interest rate then SCSS is a better choice for you.

  5. What is the rate of interest in PMVVY?

    As of January 2023, The interest rate for PMVVY is 7.4% p.a. which is payable monthly.

  6. How safe is the PMVVY scheme?

    PMVVY is a govt of India-sponsored investment scheme specially offered for senior citizens. Since it has the backing of govt of India, it is considered one of the safest investment options for senior citizens.

  7. Who can apply for PMVVY?

    Indian senior citizens with an age of more than 60 years can apply for the PMVVY scheme.

  8. Are SCSS and PMVVY the same?

    No SCSS and PMVVY schemes are not same.

    SCSS stands for senior citizens savings scheme. This scheme has a lock-in of 5 years and the investor gets benefits in investing in the scheme only after 5 years.

    PMVVY stands for Pradhan Mantri Vaya Vandana Yojana. This scheme offers a pension-like feature where the investor gets paid a monthly pension.

    PMVVY offers an interest rate of 7.4% and SCSS offers an interest rate of 8%.

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