LIC Varishta Pension Bima Yojana – Review

The LIC Varishta Pension Bima Yojana is a pension scheme for senior citizens above the age of 60 years. The person has to pay premium once to get pension on a regular basis for 5 years. After that it can be renewed for 3 years. Premium can be received either monthly, quarterly, half yearly or annually. The limit on the investment amount and the pension amount depends on the frequency of the pension that the person requires.If the policy holder dies during the tenure of the product, the purchase price will be refunded.

Read – LIC Jeevan Akshay Review

LIC Varishta Pension Bima Yojana

There are many investment options for senior citizens. Let us compare some of them –

Features LIC Varishta Pension Bima Yojana Post Office Senior Citizens Scheme Post Office MIS
What is it? It is a pension scheme for people above the age of 60 years wherein the returns on the investment will be paid as pension depending on the frequency of payout required by the investor. It is an investment scheme for senior citizens that provides a regular income stream It is an investment scheme in which returns are guaranteed. The investor gets a return of 8% p.a. on a monthly basis from the date of investment.
Investment Limits Depending on the pension receivable frequency, the minimum amount is from Rs. 63,960 and maximum amount is Rs. 6,66,665. Minimum amount – Rs. 1,000Maximum Amount – Rs. 15,00,000 Minimum amount – Rs. 1500Maximum Amount – Rs. 4,50,000 in a single account and Rs. 9,00,000 in a joint account.
Eligibility You have to be above 60 years old to invest in this scheme. It is an investment scheme for people aged above 60 years or 55 years if the person has taken voluntary retirement. If the person has retired from Defence services, the age limit would be waived. There are no conditions on age criteria to invest in this scheme.
Returns/ Payout/Interest It gives an interest rate of 9% per year for the lifetime of the individual. The returns reach up to 9.30% per annum as it is compounded quarterly. Interest is paid on 31st March, 30th June, 30th September and 31st December of each year. An annual return of 8.50% is paid on a monthly basis.
Tenure There is no fixed tenure. It can continue till death or till amount is withdrawn. You can be invested up to 5 years and that can be extended by 3 years more. You can be invested up to 5 years.
Loan The policyholder can borrow up to a maximum of 75% of the invested amount. Interest on loan will be adjusted against the pension amount. There is no facility for taking a loan against the investment amount. There is no loan facility available.
Surrender Conditions It has a lock-in period of 15 years. Amount can be withdrawn only in case of medical exigencies for self/ spouse with a penalty of 2%. There are different charges for withdrawing depending on when the withdrawal happens. There are different charges for withdrawing depending on when the withdrawal happens.
Key Benefits The pension payout frequency can be as per your convenience.It is a regular income stream.

The returns are high.

It is a low risk investment product.

It is good for economically weaker sections of the society.

The pension is deposited in the bank account which is easier to operate.


It gives a good return of around 9% per annumIt is a liquid asset.

The investment amount qualifies for deductions under Section 80C.

Returns are guaranteed.You can avail of loans.

The investment amount qualifies for deductions under Section 80C

Disadvantages There is a ceiling on the investment amount.It is illiquid

The maximum pension that you an get is Rs. 5,000 which is not enough to sustain decent living today and therefore, this cannot be the sole income earning method.

There are no tax benefits.


Interest income is taxable.The interest is deposited in the post office account and this is not so easy to manage.

If banks offer higher interest rate,

Interest income is taxableThe interest is deposited in the post office account and this is not so easy to manage.

Read – How Gratuity is Calculated

The LIC Varishta Pension Bima Yojana is less recommended even though it gives higher returns as there is a lock-in of 15 years. The pension is not enough to sustain a living. You will need much more money for living expenses. On the other hand, the Senior Citizens schemes have lower returns but the money is not locked and the maximum investment amount is quite high. You can have it as a small part of your portfolio for investment diversification if required. Which products developed for senior citizens do you have as part of your portfolio or for your parents’ portfolio?

LIC Varishta Pension Bima Yojana Review is done by Ravi Variyani

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{ 11 comments… add one }
  • Sandipan December 24, 2014, 12:43 PM

    Hi Hemant,
    Similarly, can you please suggest/review some of the best pension plans for people in their 30s? It would be really helpful to me and surely to many others like me.

    Thanks & Regards,

    • Karthikraja K December 24, 2014, 2:49 PM

      Invest in PPF and extend it for 5 years after 15 years. it is best compared to pension plan available for 30s.

  • P.Vasanthasenan December 24, 2014, 1:32 PM

    well presented; easily understandable by lay persons.

  • S Bhattacharya December 24, 2014, 3:34 PM

    Excellent and comprehensive review. However, senior citizens esp above 65 years age have a problem when it comes to choosing an insurance plan. I realised this while helping my mother to re-invest maturity amounts received. There are no term insurance plans available and the only viable investment + insurance options are these Senior Citizen Schemes. Could you suggest any good options ?

  • Sujal Shah December 25, 2014, 2:25 PM

    Hi, nice article but poorly formatted I must say. I lost interest in reading since the comparison started. Could you please reformat is so readers can ready easily.
    I enjoy your blog and I’m regular visitor.
    Thank you.

    • N seetharama September 9, 2015, 4:01 AM

      Present in a TABLE with grid-lines drawn around each cell.

  • Sushant December 25, 2014, 3:30 PM

    Dear Hemant,

    This is really Good product to invest retirement fund to get benefit for near future.
    This will give Pension through-out and after that Principal also gets return.


  • joydeep choudhury December 28, 2014, 10:16 AM

    At last, you have said something ‘good’ about LIC……Good to see this….. Thanks for being logical…… …………J Chaudhry LIC Agent

  • ramesh vadla January 10, 2015, 8:11 PM

    nice presentation sir

  • Latha February 12, 2015, 4:47 PM

    Please share your views on Sukanya Samriddhi Scheme which is recently announced by Govt.

  • Shankar M K August 14, 2015, 9:28 PM

    Another drawback in LIC pension scheme is pension payment will not commence from the very next month after depositing the money with LIC.

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