Friday, November 12, 2021

Senior Pension Insurance Scheme

Senior Pension Insurance Scheme
 Senior Pension
Insurance Scheme

A gift to the elderly: Varishtha Pension Bima Yojana

Performing the responsibility of social security, like last year, the Central Government has once again given a gift to the senior citizens of the country through 'Varishtha Pension Bima Yojana 2017' (VPBY 2017). Under this scheme, there is a provision of fixed income for senior citizens. In fact, Varishtha Pension Bima Yojana is an investment-based scheme, in which senior citizens will get a pension ranging from Rs 500 to Rs 5000 every month depending on the amount invested. 

The responsibility of implementation of this scheme has been given to the Life Insurance Corporation of India (LIC of India). Under the scheme, the insurance company will give a minimum assured benefit of 8 percent for a period of 10 years. It is worth noting that the Varishtha Pension Bima Yojana is a part of the Social Security and Financial Inclusion Program of the Government.

It is worth mentioning here that the Finance Minister of the present government, Arun Jaitley while presenting the Union Budget for the year 2014-15, proposed the Varishtha Pension Bima Yojana. Prior to this, the previous Dr. Manmohan Singh's government had run this scheme for the first time in the year 2003-04. Although the word 'insurance' is attached to the name of this plan, in reality, there is no such thing as a death benefit like a traditional insurance policy. 

In a way, it can be said that it is like a 'fixed deposit' made in banks, on which there is a provision to pay a fixed interest. The specialty of Varishtha Pension Bima Yojana, different from bank fixed deposits, is that a provision has been made to pay more interest than the interest paid by the bank. In the present scheme, a provision has been made to pay a minimum of 8 percent and a maximum of 10 percent interest.

Important points of Varishtha Pension Bima Yojana:-

The age for the beneficiaries of the scheme has been fixed at 60 years or more. In this scheme, there is a provision to take a loan after three years of investment.

The loan amount can be up to a maximum of 75 percent of the total investment.

There is a provision to return the principal amount invested in the scheme at the end of the stipulated period of the scheme. If the person dies within the stipulated period then the principal amount will be returned to the nominee by him.

In the scheme, there is a provision to make payment of pension only through the banking platform ECS or NEFT.

No medical certificate is required for investment in the scheme.

How will the pension amount be determined in the Varishtha Pension Bima Yojana?

Significantly, the Varishtha Pension Bima Yojana has been started to provide a fixed pension every month to senior citizens. But you will also have to invest a lump sum in the scheme in the same proportion as the pension you want under the scheme. After investing once in this, you will continue to get a pension for the stipulated period of the plan. The pension will be determined on the basis of the interest rate fixed for the scheme. 

According to the scale and fixed interest rate prescribed so far for the scheme, if a person wants to get a pension of Rs 500 every month, then he will have to invest Rs 74,627 in the scheme. If he wants Rs 5000 every month, then he will have to increase the investment amount to Rs 7,46,269. If a person wants to take pension on a quarterly, half-yearly, or yearly basis instead of every month, then he can also take it according to his convenience. If the interval for taking pension is longer, there is a possibility of increasing the amount of pension a little bit. Pension in the scheme will start from the next year of investment.

Other features of Varishtha Pension Bima Yojana:-

Being a special scheme of the Central Government, the possibility of risk in Varishtha Pension Bima Yojana is negligible.

It is worth noting that in the current era, interest rates are being cut continuously. The rate of interest on fixed deposits of 5 years to 15 years in banks has come down to 7 percent and there is a possibility of further decline in it. In such a situation, the benefit of 8 percent available in the Varishtha Pension Bima Yojana can prove to be a better option for senior citizens.

The biggest feature of this scheme is that even if there is a sharp fall in the interest rates, the benefit of 8 percent fixed for the scheme will remain in its place. The reason for this is the guarantee given by the government to the insurance company Life Insurance Corporation of India, under which if the insurance company suffers any loss on the interest front, then the government will compensate it on an annual basis.

Varishtha Pension Bima Yojana 2017: At a Glance -

Scheme Name Varishtha Pension Bima Yojana 2017 (VPBY 2017) Plan Duration 10 Years Nodal Agency of the Plan Life Insurance Corporation of India (LIC of India) Age for investment in the scheme Minimum 60 years and above in the plan Guaranteed return 8% in the plan Maximum amount of investment Rs 7,50,000 Pension option in the plan Monthly, quarterly, half-yearly and annual plan The option of premature withdrawal in the scheme is not yet clear for one year from the date of commencement of investment.

After looking at the format and provisions of the scheme and analyzing it, it can finally be said that it is a better investment option for senior citizens in terms of returns in the current economic scenario of the country. Apart from this, due to the direct intervention of the central government in this scheme, the possibility of risk in investment is also almost negligible. 

Yes, one of the drawbacks of this plan is that it does not include the accidental benefits available under traditional insurance.

There is no provision like the death benefit. But broadly speaking, this scheme is an excellent New Year gift from the Central Government for the senior citizens of the country and senior citizens must invest in this scheme according to their budget and future requirement.

VISIT OFFICIAL WEBSITE: https://licindia.in/Pradhan-Mantri-Vaya-Vandana-Yojana1

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