Bharatiya culture has nurtured the joint family system for centuries. Within the joint family system, the aged members of the family were taken care of. Their earnings were part of the family income and were passed on to the next generation.
With the changing times, the increase in the nuclear family system due to various reasons such as migration and settling of children out of their homes and countries, gave rise to the need of a monetary support system for senior citizens in their retirement age.
In Western countries, the Social Security scheme of the government ensures the well-being of seniors during the later years of their lives. This old-age pension acts as their security cover when they are unable to take care of themselves.
Keeping this ideal in mind, the Hon. Prime Minister initiated the Pradhan Mantri Vaya Vandana Yojna (PMVVY), a Pension Scheme, on the 4th of May 2017. Initially, it was implemented only for a year, but later it was extended up to the 31st of March 2020 and now it has been further extended for a period of three more years, till the 31st of March 2023.
The minimum entry age is 60 years, but there is no limit for the maximum age for entry.
The policy term is of 10 years. The investment limit is 15 lakhs per senior citizen. A husband and a wife can separately invest a sum that does not exceed 15 lakhs per person.
The ceiling of maximum pension for a family as a whole, i.e. total amount of pension under all the policies allowed a family under this plan, shall not exceed the maximum pension limit.
The family for this purpose will comprise of the pensioner, his/her spouse and his/her dependents.
The scheme can be purchased offline or online through the Life Insurance Corporation (LIC) of India, which has been granted the sole right to operate this scheme.
The modes of pension payment are monthly, quarterly, half-yearly and yearly. The pension payment shall be through NEFT or Aadhar enabled payment system.
Minimum pension per month is Rs.1,000/- and accordingly it increases to Rs.3,000/- for quarterly pension, Rs.6,000/- per half year and Rs.12,000/- per year.
Maximum pension per month would be Rs.12,000/- per month, Rs.30,000/- quarterly, Rs.60,000/- half yearly and Rs.1,20,000/- per year.
The PMVVY scheme provides an assured rate of interest of 7.4% per annum for the year 2020-21 and thereafter to be reset every year.
Pension is payable at the end of each period during the policy term of 10 years, monthly/quarterly/half-yearly or yearly, as chosen by the pensioner at the time of purchase.
The scheme is exempted from GST.
At the end of the policy term of 10 years, the pensioner is entitled to receive the purchase price along with the final pension installments.
Loan up to 75% of the total purchase price is allowed after 3 policy years (to meet liquidity needs).
The loan interest shall be recovered from the pension installations and the loan is to be recovered 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 a premature exit, 98% of the Purchase Price is refunded.
On the death of the pensioner, during the policy term of 10 years, the Purchase Price is paid to the beneficiary.
A shortfall owing to the difference between the interest guaranteed and the actual interest earned and the expenses relating to administration gets subsidised by the Central Government and reimbursed to the Corporation.
The PMVVY has an additional unique feature.
If a policy holder 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 of the policy is purchased online) from the date of receipt of the policy stating the reason of 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.
Even in the case of suicide, there shall be no exclusion and the full purchase price shall be payable.
Both these characteristics add a human touch to this government scheme. The Modiji-led government has portrayed immense thoughtfulness in maintaining great esteem of the elderly.
PMVVY has reached far and wide. The Central Government agencies have been successful in implementing it in the remote corners of the nation.
Sushant Gupta, age 62, in Agartala, Tripura, a small and developing state in the North-East, har just retired from his banking service and had received some funds as PF.
One of his friends informed him about various investment plans to invest and make his future years secure.
Sushant Gupta purchased the Pension plan of Rs. 7.5 Lakhs and he now receives Rs. 5000/- Pension.
Be it Mr. Mani in Kerala or Shubhangini Deb in Manipur, the Pradhan Mantri Vaya Vandana Yojna has lit up the lives of lakhs of senior citizens.
The Hon. Prime Minister’s determination to provide respectful old age to the elderly ensures a smile of satisfaction on their face.
If this is not good and humane governance, what is?