Varishta Pension Bima Yojana

To benefit the senior citizens aged 60 years and above the VarishtaPension BimaYojana (VPBY) scheme was launched. Life Insurance Corporation of India (LIC) has administered this scheme. This scheme remains open for a period of one year from the date of launch.

The Varishtha Pension BimaYojana  was previously launched in July 2003 to introduce and  offer pension cover to senior citizens above the age of 55, 

During this period, it was widely received by senior citizens as it sold over 3.16 lakh policies, amounting to around Rs 6,095 crore. Having been withdrawn a year later, the scheme was re-launched twice – first during the 2014-15 budget and later again in 2017-18 – both times by the then Finance Minister of India, Mr. Arun Jaitley.

The Scheme was implemented during the financial year to  provide social security during old age and protect elderly persons aged 60 years and above against a future fall in their interest income due to uncertain market conditions.

This scheme provides an assured pension based on a guaranteed rate of return of 8% per annum for ten years, with an option to opt for pension on a monthly / quarterly / half yearly and annual basis.

Important features

• In the form of immediate annuity this scheme provides pension during the lifetime of the pensioner with return of purchase price to the family/nominee on his/her death
• Pension payment mode can be monthly, quarterly, half-yearly or yearly.
• Through ECS or NEFT the pension payment could be done.

What are annuities?

The investment plans that offer regular payment in return of a lump sum investment are called Annuities. These annuities help provide a steady form of income after retirement.

Types of annuities

• Immediate Annuities: In this plan we can purchase the annuity plan with a lump sum amount for a limited tenure or for lifetime. Once we make this investment, our annuity payment starts immediately.
• Deferred Annuities: In this case, the annuity payment starts after a certain date. This is further divided into Accumulation Phase and Vesting Phase.

Re-launch of LIC Varishtha Pension Bima Yojana

The Union Cabinet, chaired by Prime Minister Narendra Modi approved this pension scheme in Jan 2017.This scheme is designed to provide social security for senior citizens and is implemented through Life Insurance Corporation of India.

This is a single premium policy which means that you need to pay the premium of your choice at the beginning of the policy. Once this premium is paid, you are eligible for a regular pension.

The Varishtha Pension BimaYojana offers an assured pension based on a guaranteed rate of return of 8% per annum, for a period of 10 years. Here, you can opt for the pension on monthly, quarterly, half-yearly or annual basis.

Modes of payout

• Monthly –Here, you will receive a certain annuity amount per month. The minimum premium payment for monthly payout is Rs 66,665, while the maximum premium payment is Rs 6,66,665.
• Quarterly – Under this mode of payout, you will receive annuity amount every three months or 4 times a year.
• Semi-annually -You will receive annuity on a semi-annual basis i.e. once every six months.
• Yearly – Under the yearly mode, you will receive an annuity amount once a year. This will be a large sum as compared to the other modes of payout.

Minimum Premium Payment 

Maximum Premium Payment 

Just like other policy schemes, this VarishthaBimaYojana offers benefits on income tax as well. The premiums paid under this policy are tax exempted under Section 80C of the Income Tax Act.

This means that you do not have to pay any tax on the premium payment. These tax benefits along with the assured pension help you plan your savings better in a way. However, the pension amount that you receive will be taxable.

In case of any critical illness, you can surrender this policy within 15 years of opening. Here, you will receive up to 98% of the single premium paid. If you surrender the policy after completion of 15 years, then you can get up to 100% returns on the single premium paid.

The LIC Varishtha Pension Bima Yojana is an important part of the government’s financial inclusion programme. It is designed to social and financial security for senior citizens in the form of assured pensions.

Minimum Pension Payment

Maximum Pension Payment