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FM launches pension plan for senior citizens with 8 pc assured return
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SME Times News Bureau | 22 Jul, 2017
Finance Minister Arun Jaitley on Friday formally launched a pension
scheme for senior citizens with an assured return rate of eight per
cent, favouring efficiency with social security.
"Banks have to
lend at feasible rates, while senior citizens want secure, reasonable,
unfluctuating return on their investment," Jaitley said here launching
the pension scheme -- Pradhan Mantri Vaya Vandana Yojana (PMVVY).
The
PMVVY is a pension scheme announced by the government exclusively for
the senior citizens aged 60 years and above, which is open for
subscription between May 4, 2017 and May 3, 2018.
It provides an
assured return of eight per cent per annum payable monthly (equivalent
to 8.30 per cent per annum effectively) for 10 years.
"We have to maintain a critical balance between efficiency and social security," Jaitley said.
The
scheme can be purchased offline as well as online through the Life
Insurance Corporation (LIC), which has been given the sole privilege to
operate this scheme.
"Since the launch of scheme on May 4, it has
already been subscribed 58,152 times so far and Rs 2,705.04 crore
premium has also been collected," the LIC said.
Under the scheme,
the pension returns are payable at the end of each period, during the
policy term of 10 years. The frequency of payment can be monthly/
quarterly/ half-yearly/ yearly, as opted for by the subscriber.
The scheme is exempt from the Goods and Services Tax (GST).
On
survival of the pensioner till the end of the policy term of 10 years,
purchase price along with final pension instalment shall be payable.
Loan
up to 75 per cent of the subscription amount shall be allowed after
three policy years (to meet the liquidity needs). Loan interest shall be
recovered from the pension instalments and the principal from the claim
proceeds.
The scheme also allows for premature exit for the
treatment of any critical/ terminal illness of self or spouse. On such
premature exit, 98 per cent of the subscription amount shall be
refunded.
On death of the pensioner during the policy term of 10 years, the subscription amount shall be paid to the beneficiary.
The
ceiling of maximum pension is for a family as a whole, wherein the
family will comprise pensioner, his/her spouse and dependants.
The
shortfall owing to the difference between the interest guaranteed and
the actual interest earned and the expenses relating to administration
shall be subsidised by the government and reimbursed to the LIC.
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