Government of India in the Union Budget 2014-2015, announced the revival of Varishtha Pension Bima Yojana. Excerpts from budget speech by Honrable Finance Minister are, “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“. LIC of India has been given the sole privilege to operate this scheme.
Highlights of the scheme
1. Valid for people above the Age of 60
2. Maximum Monthly Pension is Rs 5,000 against a 1 time premium of Rs 6,66,665.
3. Post life of Policy Holder the principal will be transferred to nominee.
4. After 15 Years Policy can be surrendered – redemption same as purchase price
5. No redemption possible before 15 years (Exception for critical Illness)
6. After 3 years – Loan can be availed unto 75% of policy value
7. Monthly Pension is Taxable
8. Limited to One pension / Family
9. Scheme is open for a limited time of 1 year , closes Aug 2015
10. How is scheme better than FD ?
a) FD Interest rates for Sr citizens is 9.5% for greater than 1 year tenure.
b) However bank Interest rates may fluctuate during life based on interest cycle – in case of this policy this interest rate is fixed during the entire life of policy holder
c) FD Liquidity is better than LIC
d) LIC Scheme is subject to Service Tax
e) Interest from both schemes are Taxable – if person is in Taxable limit