The aged vote for steady and secure income. The Centre has brought in such a pension plan, called 'Pradhanmanthri Vayo Vandana Yojana.' Let us see what experts have to say on its advantages and disadvantages.
Those in an unorganised sector and the self-employed, have limited options when it comes to pension policies. National Postal Services (NPS), unit-based pension schemes and even pension schemes offered by insurance companies are all for those who will retire in future. There is something called annuity, in which income can be earned from the month, immediately after investing. However, the returns on this is less. Among the schemes that assure monthly income at present, only Senior Citizen Savings Scheme assures 8.3 per cent interest. The remaining are below eight per cent rate of interest. At this point, Centre has introduced Vayo Vandana Yojana, that gives eight per cent interest. Life Insurance Corporation (LIC) of India runs the policy.
Anyone who is past 60 years of age, is eligible to invest in this scheme. There is no maximum age limit. Anyone who has crossed 60 years can invest in this and earn returns. The term is 10 years. Monthly income can be earned at the rate of eight per cent per annum. It is exempted from GST. While it was brought in to effect from May 4th, this year, LIC has already managed to offer 58,000 policies and collected Rs. 2,700 crore as investment. However, official announcement was made recently. Policies can be bought online and offline. There is a chance of joining this policy only up till May 3rd next year. After that, there is no chance of investing in this policy. Pension can be earned monthly, tri-monthly, and once in every six months.
You must invest Rs. 1,44,578, if you want to earn monthly pension. A maximum of Rs. 7,22,892 can be invested. Then you can earn a minimum of Rs. 1,000 a month or a maximum of Rs. 5,000 a month.
A minimum of Rs. 1,47,601 or a maximum of Rs. 7,38,007 should be invested. Then the minimum tri-monthly income will be Rs. 3,000 and the maximum will be Rs. 15,000.
Once in six months
A minimum of Rs. 1,49,068 and a maximum of Rs. 7,45,342 should be invested. Then a minimum pension of Rs. 6,000 and a maximum of Rs. 30,000 can be earned, once in six months.
You can take a policy for Rs. 1.5 lakh minimum and Rs. 7.5 maximum. The returns will be a minimum of Rs. 12,000 and a maximum of Rs. 60,000 pension annually. Simply said, for every Rs. 1,000 investment, Rs. 80 can be earned annually and Rs. 80.50 every month. For once in every month, income will be Rs. 81.30, and Rs. 83 annually.
The maximum limit for pension mentioned here, is for the whole family. Pensioner, his or her spouse, and dependents on the pensioner, together are called family. This restriction has been placed, so as not to open separate accounts in the names of same family members. Pension is credited in the bank account directly. If the policy holder dies before the term ends (within 10 years), the invested amount is given to the nominee or heirs. As the pension is earned as per the conditions, the invested amount only is returned. You have to quote special reasons, if you want to withdraw from the policy in between. Those who are ill and need money for treatment, can withdraw 98 per cent of the investment. After three years of investment, if you need, you can take a loan. The loan amount will be 75 per cent of the investment. Interest of 10 per cent is charged. If you are not happy with the conditions and other aspects of the policy, after taking it, you can return it. Neither the invested amount or the interest earned are taxable.
Is it useful?
Eight per cent interest rate, along with returns, is not a bad idea. Other than this, only in Senior Citizen Savings Scheme, you have 8.3 per cent interest. All the remaining schemes have less interest rate. The maximum interest is Rs. 5,000. You cannot invest more than Rs. 7.5 lakh. This amount is not enough for a family. Moreover, this amount will not suffice for all the needs of a retired person. Instead, it is better to invest in debt mutual funds, and earn returns regularly, according to financial planner, Suresh Sadagopan. The scheme will be useful only to those whose monthly needs are limited.