Pradhan Mantri Vaya Vandana Yojana (PMVVY)

A Pension Calculator for Existing Policyholders.

Calculator 1: Check Your Existing Pension

Calculator 2: See How Purchase Price Was Calculated

All About Pradhan Mantri Vaya Vandana Yojana (PMVVY)

The Pradhan Mantri Vaya Vandana Yojana (PMVVY) was a government-guaranteed pension plan, managed by LIC, specifically designed to give senior citizens a secure income after retirement. For ten years, it provided a fixed pension, offering financial stability and peace of mind. While the scheme is now closed for new members, this page serves as a complete guide for existing policyholders to understand all the features and benefits of their investment.

Who Was Eligible to Invest?

  • The minimum entry age was **60 years** (completed).
  • There was no maximum entry age.
  • The investor had to be a citizen of India.

How Pension Frequency Affected the Purchase Price

A very smart feature of the PMVVY was how it rewarded patience. The investment amount (the 'Purchase Price') was lower if you chose to receive your pension less frequently. This wasn't a direct discount, but a benefit based on the 'time value of money'. When you chose a yearly payout, LIC held onto the interest for the whole year. This allowed them to offer you the same total annual pension for a slightly smaller initial investment.

Example from the scheme: To get a total pension of ₹60,000 over a year:

  • For a **monthly** pension of ₹5,000, the required Purchase Price was **₹8,10,811**.
  • For a **yearly** pension of ₹60,000, the required Purchase Price was only **₹7,95,341**.

This meant you paid about ₹15,000 less upfront for the same yearly income. You can test this in Calculator 2 above.

Key Features of the PMVVY Scheme

  • Policy Term: The policy had a fixed term of 10 years.
  • Guaranteed Pension: It offered a fixed, assured pension for the entire 10-year term, with rates locked in at the time of purchase. For the final batch of policies, this was 7.40% p.a. payable monthly.
  • Return of Purchase Price: At the end of the 10 years (on survival of the pensioner), the entire initial investment amount is returned.
  • Death Benefit: In the unfortunate event of the pensioner's death during the 10-year term, the full Purchase Price is paid to the nominee. Your capital is never lost.
  • Loan Facility: After completing 3 policy years, a loan of up to 75% of the Purchase Price could be availed.
  • Premature Exit: The policy could be surrendered before 10 years only for the treatment of a critical or terminal illness of the pensioner or their spouse. In such cases, 98% of the Purchase Price was returned.

Tax Rules for PMVVY (Important for Policyholders)

It is very important for all policyholders to understand how their pension is taxed.

  • Pension is Taxable Income: The pension you receive from PMVVY is considered your income. It is added to your other income (like from other investments) and is taxed according to the income tax slab you are in for that financial year.
  • No Tax Benefit on Investment: The initial amount you invested in PMVVY did **NOT** qualify for any tax deduction under Section 80C.
  • TDS and Form 15H: If your total interest income in a year is high, LIC may deduct Tax at Source (TDS). However, if your total income for the year is below the taxable limit, you can prevent this. You must submit **Form 15H** (a declaration for senior citizens) to your LIC branch at the beginning of every financial year. This form tells LIC that you are not liable to pay tax, so they should not deduct any TDS.