Varishtha Pension Bima Yojana for Senior Citizens
Updated: Sep 19, 2014 01:39:06pm
New Delhi, Sept 19 (KNN) Government of India in the Union Budget 2014-2015, announced the revival of Varishtha Pension Bima Yojana (VPBY). The Union Finance Minister 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".
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. He 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 cent per annum on their deposits as they are being paid on monthly basis.
This initiative 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.
Under this revived 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.
Benefits of Varishtha Pension Bima Yojana
a. Pension Payment: During the lifetime of a Pensioner, pension in the form of immediate annuity as per mode chosen by the Pensioner shall be payable.
b. Death Benefit: On death of the Pensioner, the Purchase Price shall be refunded.
Eligibility Conditions and Other Restrictions:
a) Minimum Entry Age: 60 years (completed)
b) Maximum Entry Age: No limit
c) Minimum Pension: Rs 500 per month
Rs 1,500 per quarter,
Rs 3,000 per half-year
Rs 6,000 per year
d) Maximum Pension: Rs. 5000 per month
Rs. 15,000 per quarter,
Rs. 30,000 per half-year
Rs. 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.
Payment 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.
The minimum and maximum Purchase Price under different modes of pension will be as under:
The Purchase Price to be charged shall be rounded to nearest multiple of Rs 5.
Mode 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 instalment 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.
Sample 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 per annum
Half-yearly: Rs 91.7045 per annum
Quarterly: Rs 90.6767 per annum
Monthly: Rs 90.0000 per annum
The pension instalment shall be rounded off to the nearest rupee. These rates are not age specific.
Surrender Value: 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 per cent of Purchase Price.
Loan: Loan facility is available after completion of 3 policy years. The maximum loan that can be granted shall be 75 per cent 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: Taxes including Service Tax, if any, shall be as per the Tax laws and the rate of tax as applicable from time to time.
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.
Free Look period: 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.
Some key features of the scheme are:
· Available to citizens aged 60 years and above.
· Pension 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 exercised.
· The payout implies an assured return of 9 per cent on monthly payment basis, which amounts to an annualized return of 9.38 per cent.
· Loan (up to 75 per cent of subscribed amount) can be availed after 3 years from the Date of Commencement.
· On death, the full purchase price will be refunded to nominee.
· Exit/surrender would be allowed after 15 years or earlier in special circumstances like critical / terminal illness of self or spouse.
· Payment will be through ECS or NEFT. (KNN/PIB)
*D S Malik is Additional Director General in PIB New Delhi
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. He 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 cent per annum on their deposits as they are being paid on monthly basis.
This initiative 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.
Under this revived 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.
Benefits of Varishtha Pension Bima Yojana
a. Pension Payment: During the lifetime of a Pensioner, pension in the form of immediate annuity as per mode chosen by the Pensioner shall be payable.
b. Death Benefit: On death of the Pensioner, the Purchase Price shall be refunded.
Eligibility Conditions and Other Restrictions:
a) Minimum Entry Age: 60 years (completed)
b) Maximum Entry Age: No limit
c) Minimum Pension: Rs 500 per month
Rs 1,500 per quarter,
Rs 3,000 per half-year
Rs 6,000 per year
d) Maximum Pension: Rs. 5000 per month
Rs. 15,000 per quarter,
Rs. 30,000 per half-year
Rs. 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.
Payment 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.
The minimum and maximum Purchase Price under different modes of pension will be as under:
| Mode of Pension | Minimum Purchase Price | Maximum Purchase Price |
| Yearly | Rs 63,960 | Rs 6,39,610 |
| Half-yearly | Rs 65,430 | Rs 6,54,275 |
| Quarterly | Rs 66,170 | Rs 6,61,690 |
| Monthly | Rs 66,665 | Rs 6,66,665 |
The Purchase Price to be charged shall be rounded to nearest multiple of Rs 5.
Mode 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 instalment 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.
Sample 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 per annum
Half-yearly: Rs 91.7045 per annum
Quarterly: Rs 90.6767 per annum
Monthly: Rs 90.0000 per annum
The pension instalment shall be rounded off to the nearest rupee. These rates are not age specific.
Surrender Value: 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 per cent of Purchase Price.
Loan: Loan facility is available after completion of 3 policy years. The maximum loan that can be granted shall be 75 per cent 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: Taxes including Service Tax, if any, shall be as per the Tax laws and the rate of tax as applicable from time to time.
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.
Free Look period: 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.
Some key features of the scheme are:
· Available to citizens aged 60 years and above.
· Pension 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 exercised.
· The payout implies an assured return of 9 per cent on monthly payment basis, which amounts to an annualized return of 9.38 per cent.
· Loan (up to 75 per cent of subscribed amount) can be availed after 3 years from the Date of Commencement.
· On death, the full purchase price will be refunded to nominee.
· Exit/surrender would be allowed after 15 years or earlier in special circumstances like critical / terminal illness of self or spouse.
· Payment will be through ECS or NEFT. (KNN/PIB)
*D S Malik is Additional Director General in PIB New Delhi
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