Government has launched the ‘Pradhan Mantri Vaya Vandana Yojana (PMVVY)’ to provide social security during old age and to protect elderly persons aged 60 and above against a future fall in their interest income due to uncertain market conditions. The scheme enables old age income security for senior citizens through provision of assured pension/return linked to the subscription amount based on government guarantee to Life Insurance Corporation of India (LIC).

The scheme provides an assured return of 8% per annum for 10 years. The differential return, i.e. the difference between return generated by LIC and the assured return of 8% per annum would be borne by Government of India as subsidy on an annual basis. Pension is payable at the end of each period during the policy tenure of 10 years as per the frequency of monthly/quarterly/ half-yearly/yearly as chosen by the subscriber at the time of purchase. Minimum purchase price under the scheme is ₹ 1,50,000/- for a minimum pension of ₹ 1,000/- per month and the maximum purchase price is ₹ 7,50,000/- for a maximum pension of ₹ 5,000/- per month. The scheme is exempted from Goods and Services Tax. The scheme is open for subscription till 3rd May 2018.

This was stated by Shri Shiv Pratap Shukla, Minister of State for Finance in written reply to a question in Lok Sabha today.

Assured pension scheme for senior citizens: government guarantees returns and subsidises any shortfall to secure retirement income. A government-backed annuity scheme provides assured pension for senior citizens through an insurer with a government guarantee; a government-paid subsidy covers any shortfall between insurer returns and the assured return. Pension payments are made at subscriber-selected frequencies during the policy term. The scheme sets minimum and maximum purchase thresholds tied to corresponding pension levels, is exempt from goods and services tax, and is open for subscription within a prescribed enrollment window.