Should A Senior Citizen Invest in Pradhan Mantri Vaya Vandana Yojana

Pradhan Mantri Vaya Vandana Yojana (PMVVY) was launched a few years back to provide an avenue of income for senior citizens in the country.  It expired in March 2020 but was relaunched this month.

Let us dive into the details of the scheme –

Should A Senior Citizen Invest in Pradhan Mantri Vaya Vandana Yojana

ReadFacts about Retirement Planning


  • It is a non-linked non-participating scheme.
  • It is available for purchase till 31st March 2023.
  • It is a 10-year scheme which means you will get a pension for 10 years.
  • People above the age of 60 years can purchase this scheme.
  • It can be purchased by payment of a lump-sum amount. The purchase price depends on the mode of pension that the scheme owner wants –
Mode of pension Yearly Half Yearly Quarterly Monthly
Minimum Purchase Price ₹1,56,658 ₹1,59,574 ₹1,61,074 ₹ 1,62,162
Maximum Purchase Price ₹14,49,086 ₹ 14,76,064 ₹ 14,89,933 ₹15,00,000
  • The first installment will be paid after one year, 6 months, 3 months, or one month as per the mode selected.
  • The scheme can be purchased from LIC either online or offline.
  • In the event of the death of the owner during the policy term, the purchase price shall be returned to the beneficiary.
  • The pension income will be added to the individual’s total income and will be subject to tax as per the tax slab applicable.
  • It is available only for residents of India. Pension payment will be released when Life Certificate is presented in the month of November every year as per LIC Proforma or online “Jeevan Pramaaan”.

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  • The rate of interest on policies purchased until 31st March 2021 will be 7.40% p.a. payable monthly (effective 7.66% p.a.). The interest rate on policies purchased after 31st March 2021 will be decided by the Finance Ministry at the beginning of each financial year.
  • The minimum and maximum pension amount that the scheme owner can get depends on the mode of pension –
Mode of pension Yearly Half Yearly Quarterly Monthly
Minimum Pension ₹12,000 ₹6,000 ₹3,000 ₹1,000
Maximum Pension ₹1,11,000 ₹55,000 ₹27,750 ₹9,250
  • The scheme owner can avail of a loan after 3 years of purchase. The maximum amount of loan can be up to 75% of the purchase price. Interest on the loan will be deducted from a pension paid.
  • The scheme allows for premature surrender for the treatment of critical, terminal illness of self or spouse. The surrender value payable will be 98% of the purchase price.

  Check- 5 Steps For Happy Retirement.

Should A Senior Citizen Invest In The Pradhan Mantri Vaya Vandana Yojana?

The policy is backed by the government. So there is low credit risk. This is a low-risk investment. The interest rate is slightly higher than the interest rate on fixed deposits in many banks. It will provide a regular source of income for 10 years. A senior citizen and spouse can invest up to ₹ 30,00,000 in the scheme. It also provides features of premature exit and loans against investment.

On the other hand, the interest rate is not fixed. As compared to the Senior Citizens Savings Scheme and NPS, it does not qualify for 80C tax deduction. Moreover, you can easily exit out of the SCSS on payment of penalty. You can only exit from this investment prematurely in case of a critical or terminal illness of self or spouse. If you are from a higher income bracket or have expenditure that far increases the returns from this, you will have to look at other sources of money. Investments in Mutual funds and stocks will give you higher returns albeit with higher risk. NRIs are not allowed to invest in this scheme.

It will be good to invest in multiple products for retirement, which gives a regular source of income. At the same time, keep an eye on your liquidity and ensure that you have investments that can be liquidated more easily as compared to the Vaya Vandana Yojana. You can go for this product if you want a simple product that gives a regular source of income and your income and wealth sources are limited. Read about Wealth Creation Here – Key To Wealth creation.

This post is written by Vidya

If you have any questions related to Pradhan Mantri Vaya Vandana Yojana (PMVVY) – add in the comment section.

Should A Senior Citizen Invest in Pradhan Mantri Vaya Vandana Yojana


  1. If some one had already taken PMVVY for 1,50,000 (8%) ( Monthly 1000, Pension).How much more can he invest now.Also the current Interest rate 7.4% , will it be applicable for Full Tenure or it will also change .

    • Hi Hari Gopal Sharma,
      The maximum investment limit is Rs 3000000(senior citizen and spouse) and yes it will be the same.

    • Hi Hari Gopal Sharma,
      The investment limit is 3000000(senior citizen and spouse) and yes the interest rate will be the same.

  2. Is any tax relief is provided, under Income Tax Act, on the Long Term Capital Gain, arrived on sale of residential plot/land in the urban area of Delhi NCR. The plot/land was sold in July 2019, after holding it for about 30 years. If so, under which Section of IT Act ? (2) what are the valid investment options under IT Act, to save tax on the LTCG ? Please advise. Thanks & Regards. …PC Pande

    • Hi,
      As per my knowledge you were eligible for section 54EC if you invested that amount in the notified bonds within the 6 months of the sale.
      And if it is a house property gain as you mention (residential plot),you can invest that money by buying new residential house to avail the benefits of Section 54/ 54F.

  3. Regarding PMVVY once you buy the scheme the prevailing rate of interest at the time of buying is fixed for its tenure of 10 yrars. How come u said “the rate of interest is not fixed” then ?

    Both are your statements that contradict each other.

    • Hi Shashikant Eklare,
      Here may be it is stated for the policies purchase after 31 March 2021,as it can be higher or lower than the present rate.
      Thats why it might be considered as a negative aspect of the policy(rate of interest is not fixed).

  4. I am a senior citizen and had invested in PMVYY on 20th March 2020 as the scheme was closing on 31st March. My cheque was cleared on 12th April 2020.But till date I have not received any confirmation or policy document from LIC. My agent is saying that I will now be registered in the new scheme which is not fair.
    Please advice.

  5. thank you so much for sharing this information with it really helpful and can help other people also I found it helpful and going to share this with my own text maybe this help them also.

  6. really nice topic is given by you . this article explained very well lots of great points you considered here. I especially like the way of you presented is great thanks for sharing the article

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