PM Vaya Vandana Yojana
PM Vaya Vandana Yojana (PMVVY) was an LIC-administered government-guaranteed pension scheme for senior citizens aged 60 and above, offering assured returns of up to 7.4% per annum with monthly pension payment options, available for subscription from May 2017 and closed to new subscriptions after 31 March 2023.
PMVVY was launched by the Government of India in May 2017 and administered exclusively through the Life Insurance Corporation of India (LIC) as a special pension product for senior citizens. The scheme offered an assured return independent of market conditions — a significant differentiation at a time when declining bank deposit rates were eroding the income of fixed-income-dependent retirees. The government bore the subsidy differential between PMVVY's guaranteed return and LIC's actual market returns.
The scheme was revised and extended twice: the first version (May 2017 to March 2020) offered 8% per annum return, and the second version (May 2020 to March 2023) offered 7.4% per annum, reflecting the lower interest rate environment post-COVID. The maximum investment limit was progressively raised: from Rs 7.5 lakh in the original version to Rs 15 lakh per senior citizen in the final version, allowing a couple to collectively invest up to Rs 30 lakh.
Investors could choose between monthly, quarterly, half-yearly, or annual pension payment modes, with the pension amount varying based on the chosen frequency (monthly mode yielded slightly less than annual mode in effective rate terms due to present value timing differences). A 10-year policy term meant that the principal was returned to the investor (or nominee in case of death) at the end of 10 years, making it a capital-preservation instrument alongside providing regular income.
Premature exit was allowed after 3 years in exceptional circumstances, such as critical illness of the investor or spouse. Loans up to 75% of the purchase price were available after 3 policy years. PMVVY was marketed alongside SCSS as part of the government's financial protection framework for elderly citizens.
With the scheme's closure to new subscriptions in March 2023, existing policyholders continue to receive benefits until their respective policy maturities (10 years from investment date). The closure reflected the government's reassessment of fiscal cost as market interest rates rose from their pandemic-era lows. Prospective senior citizen investors considering similar options post-2023 have been directed towards SCSS (Senior Citizen Savings Scheme), which continues to be available with competitive rates and higher investment limits than the early PMVVY versions.