Banking Awareness – Varishtha Pension Bima Yojana – Rate, Limit, Features


Hello and welcome to exampundit. Today we will be discussing about Varishtha Pension Bima Yojana.

Varishtha Pension Bima Yojana 2017 (VPBY 2017) is a pension scheme subsidised by the Government of India. The amount of investment made in the scheme is called the ‘purchase price’.

Varishtha Pension Bima Yojana

Depending on the pension option (monthly, quarterly, yearly), the pension begins as an arrear i.e. starts from the end of the chosen period.

The scheme is for a period of ten years and based on the amount of investment, it carries fixed and assured pension (return) as mentioned in the policy document till the maturity of the scheme.

Returns in Varishtha Pension Bima Yojana

Unlike other pension plans such as Jeevan Akshay, ( an immediate annuity scheme of LIC ) the amount of pension in PMVVY is not based on age. The return in PMVVY range from 8 to 8.3 percent depending on the mode of pension that one chooses. Similar to post office monthly income scheme or the senior citizen savings scheme (SCSS), the maximum investment amount (purchase price) and the pension amount that one can get is capped.

The limits

The total amount of pension or the purchase price under all the PMVVY policies allowed to a family cannot exceed Rs 60,000 per annum or Rs 7.5 lakh respectively. The family for this purpose will comprise of the pensioner, his or her spouse and dependents.

Calculation of pension amount

Illustratively, if one invests Rs 5 lakh (purchase price) and opts for a yearly pension, the pension amount will be:

For every Rs 1,000, it is Rs 83 per annum, therefore for Rs 5 lakh, the pension amount comes to Rs 41,500 annually. So, if one needs a monthly pension of Rs 3,000, one needs to invest Rs 4.5 lakh. On investing the maximum allowed amount of Rs 7.5 lakh, a monthly pension for ten years will be Rs 5,000.

The modes of pension payment are monthly, quarterly, half-yearly & yearly. The pension payment shall be through NEFT or Aadhaar Enabled Payment System.

On maturity or on death

PMVVY has a term of ten years and on surviving the date of maturity, the purchase price along with the final pension installment is refunded to the individual. On death during the policy term of 10 years, only the purchase price is refunded to the beneficiary.

Early exit

In case the investor needs money for the treatment of any critical or a terminal illness of self or spouse, the exit is allowed and in that case the 98 percent of Purchase Price will be refunded.

Where to buy

LIC of India has been given the sole privilege to operate this scheme. This scheme can be purchased offline as well as online from the LIC website.


There is no tax benefit available on the amount invested. Further, the pension received will be fully taxable in the hands of the individual in the year of receipt. The government, however, has exempted PMVVY from service tax. The notification can be read here .

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