Government of India subsidized scheme with an assured return of 9% per annum
effective yield for monthly pension (equivalent to 9.38% per annum)
Sh. D. S. Malik*
Government of India in the Union Budget
2014-2015, announced the revival of Varishtha Pension Bima Yojana (VPBY). The
Union Finance Minister Shri Arun Jaitley said in his Budget Speech, "NDA
Government during its last term in office had introduced the Varishtha Pension
Bima Yojana (VPBY) as a pension scheme for senior citizens. Under the scheme, a
total number of 3.16 lakh annuitants are being benefited and corpus amounts to
Rs.6, 095 Crore. I propose to revive the scheme for a limited period from 15th
August 2014 to 14th August 2015 for the benefit of citizens aged 60
years and above".
The Union Finance
Minister said that Varishtha Pension Bima Yojana (VPBY) will benefit the
vulnerable section of society with limited resources as it will provide monthly
pension ranging from Rs 500/ to Rs 5,000/ per month to senior citizens of the
country. The Finance Minister Shri Jaitley said that VPBY is like reverse of a
normal insurance policy as in case of VPBY, the beneficiary gets an income at
the overall rate of 9.38 % per annum on their deposits as they are being paid
on monthly basis.
reflects the commitment of the Government to the welfare and well-being of the
senior citizens of the country, which is especially important in the light of
the increasing longevity in India, which has gone up substantially. The
subscription to the scheme is likely to create a corpus of more than Rs. 10,000
crore, and would thus also be a significant source of resource mobilization for
the development of the country.
revived Varishtha Pension Bima Yojana (VPBY), the senior citizens would get pension
on fixed basis either on yearly or monthly basis which will provide social
security to senior citizens.
LIC of India has
been given the sole privilege to operate this scheme.
lifetime of a Pensioner, pension in the form of immediate annuity as per mode
chosen by the Pensioner shall be payable.
On death of the
Pensioner, the Purchase Price shall be refunded.
Conditions and Other Restrictions:
Minimum Entry Age: 60 years (completed)
Maximum Entry Age: No limit
Minimum Pension: Rs. 500/- per month
1,500/- per quarter,
3,000/- per half-year
6,000/- per year
Maximum Pension: Rs. 5000/- per month
15,000/- per quarter,
30,000/- per half-year
60,000/- per year
Ceiling of maximum pension is for a
family as a whole i.e. total amount of pension under all the policies issued to
a family under this plan shall not exceed the maximum pension limit. The family
for this purpose will comprise of pensioner, his/her spouse and dependants.
of Purchase Price:
The plan can be
purchased by payment of a lump sum Purchase Price. The pensioner has an option
to choose either the amount of pension or the Purchase Price.
minimum and maximum Purchase Price under different modes of pension will be as
Mode of Pension
Minimum Purchase Price
Maximum Purchase Price
The Purchase Price to be charged shall
be rounded to nearest multiple of Rs.5/-.
of pension payment:
The modes of pension payment are
monthly, quarterly, half-yearly & yearly. The pension payment shall be
through ECS/NEFT only.
The first installment of 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.
Pension rates per Rs.1000/- Purchase Price
The pension rates for Rs.1000/- Purchase
Price for different modes of pension payments are as below:
Yearly: Rs. 93.8069 p.a.
Half-yearly: Rs. 91.7045 p.a.
Quarterly: Rs. 90.6767 p.a.
Monthly: Rs. 90.0000 p.a.
pension installment shall be rounded off to the nearest rupee. These rates are
not age specific.
The policy can be surrendered after completion
of 15 years. The Surrender Value payable will be refund of Purchase Price.
However, under exceptional circumstances, if the pensioner requires money for
the treatment of any critical/terminal illness of self or spouse then the
policy can be surrendered before the completion of 15 years and the Surrender
Value payable shall be 98% of Purchase Price.
Loan facility is available after
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
loan amount would be determined from time to time by the Corporation.
Loan interest will be recovered from
pension amount payable under the policy. The Loan interest will accrue as per the
frequency of pension payment under the policy and it will be due on the due
date of pension. However, the loan outstanding shall be recovered from the
claim proceeds at the time of exit.
Taxes including Service Tax, if any,
shall be as per the Tax laws and the rate of tax as applicable from time to
The amount of tax payable as per the
prevailing rates shall be payable by the policyholder on Purchase Price. The
amount of Tax paid shall not be considered for the calculation of benefits payable
under the plan.
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 from the date of receipt of the policy stating
the reason of objections.
The amount to be refunded within free
look period shall be the Purchase Price deposited by the policyholder after
deducting the charges for Stamp duty.
key features of the scheme are:
to citizens aged 60 years and above.
would be on immediate annuity basis in monthly, quarterly, half-yearly or
annual mode, varying, respectively, between Rs. 500 to 5000 (monthly), Rs. 1500
to 15,000 (quarterly), Rs. 3000 to Rs. 30,000 (half-yearly) and from Rs. 6,000
to Rs. 60,000 (annually), depending on the amount subscribed and the option
payout implies an assured return of 9% on monthly payment basis, which amounts
to an annualized return of 9.38%.
(up to 75% of subscribed amount) can be availed after 3 years from the Date of
death, the full purchase price will be refunded to nominee.
would be allowed after 15 years or earlier in special circumstances like
critical / terminal illness of self or spouse.
will be through ECS or NEFT.
D. S. Malik is Additional Director General in PIB New Delhi
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