To protect our senior citizens from falling interest rates, the government has launched Varishtha Pension Bima Yojana 2017. This is a pension scheme that guarantees 8% return for 10 years.
The launch date has not been notified yet.
Government has launched this scheme earlier as well. A similar program by the same name ‘Varishtha Pension Bima Yojana’ was announced earlier where it offered a 9% return. This scheme was open from August 2014 to August 2015.
Let’s take a look at the features of the new scheme.
[Note: details which are not yet available have been taken from Varishtha Pension Bima Yojana of 2014-15]
|Minimum age||60 yrs|
|Maximum age||No Limit|
|Minimum Investment (old scheme)||Rs 66,665(one time )|
|Maximum Investment (old scheme)||Rs 6,66,665(one time)|
|Lock- in||10 years|
|Interest rate||8% monthly|
|Minimum Pension (old scheme)||Rs 500 per month|
|Maximum Pension (old scheme)||Rs 5,000 per month|
|Taxability of interest||Treated as income in the year in which it is earned.|
|Tax benefits on Principal||No tax benefits|
|Premature withdrawal (as per old scheme)||Only for critical illness with penalty of 2%.|
The Salient features of Varishtha Pension Bima Yojana -2017 Scheme announced recently are:
- AGE Criteria: No change in age criteria. Only Senior citizens (60 yrs or more) are eligible.
- Guaranteed rate: There is a change in guaranteed rate of interest. The 8% interest will be provided for 10 yrs as against 9% earlier. But earlier the lock in period was 15 yrs. In Present scheme, interest will be provided for 10 yrs.
- Pension Pay-outs: Also, Pension Pay-outs are same. It can be monthly, quarterly, half yearly or annually.
- Implementation by LIC: As earlier, LIC has been given the sole privilege to operate this scheme. The differential return – the difference between the return generated by LIC and the assured return of 8 per cent per annum would be borne by the government as a subsidy on annual basis
Once the scheme is launched, subscriptions will be available for 1 year.