Finance Ministry Current Affairs

Enter your Email address to receive updates in your inbox

Government launches Pradhan Mantri Vaya Vandana Yojana for senior citizens

The Union Finance Ministry has launched Pradhan Mantri Vaya Vandana Yojana (PMVVY), a pension scheme exclusively for senior citizens aged 60 years and above.

Under this scheme, senior citizens will get a guaranteed interest of 8% for 10 years depending upon the investment made by them.

Features of PMVVY

This PMVVY scheme will be available from May 4, 2017 to May 3, 2018. Life Insurance Corporation of India (LIC) has been given the sole privilege to operate the scheme. It can be purchased offline as well as online through LIC.

This scheme provides an assured return of 8% per annum payable monthly for 10 years on single lumpsum premium ranging from Rs. 150000 (minimum) to Rs.750000 (maximum). Pension (minimum: Rs.1000/ month; maximum: Rs.5000) will be payable at the end of each period, during the policy term of 10 years, as per the frequency of monthly, quarterly, half-yearly, yearly as chosen by the pensioner at the time of purchase.

It is exempted from goods and services (GST) tax. It will offer senior citizens more avenues to earn steady regular income at a time of falling interest rates. On survival of the pensioner to the end of the policy term of 10 years, the purchase price of the scheme along with the final pension instalment will be payable.

The scheme also offers loan up to 75% of the purchase price after 3 policy years (to meet the liquidity needs). Loan interest will be recovered from the pension instalments and loan will be recovered from claim proceeds.

The scheme allows for premature exit for the treatment of any critical terminal illness of self or spouse.  On such premature exit, 98% of the purchase price would be refunded. On death of the pensioner during the policy term of 10 years, the purchase price should be paid to the beneficiary.

Tags:

Government lowers interest rates on Small saving schemes by 0.1%

The Union Finance Ministry has lowered interest rates on all nine small saving schemes by 0.1% for the April-June quarter as compared to January-March quarter.

These schemes includes Public provident fund (PPF), National Savings Certificate (NSC), Kisan Vikas Patra, Sukanya Samriddhi Account, Senior Citizens Savings Scheme. It does not include Post Office Savings Account.

Key Facts
  • Investments in the PPF scheme will fetch lower annual rate of 7.9% from previous rate of 8%.
  • 5-year National Savings Certificate will also fetch lower annual rate of 7.9% from previous rate of 8.
  • Kisan Vikas Patra (KVP) investments will yield 7.6%
  • Sukanya Samriddhi Account Scheme, will offer 8.4% annually, from 8.5% at present.
  • Senior Citizens Savings Scheme will offer 8.4% for the 5-year. The interest rate is paid quarterly.
  • Term deposits of 1-5 years will fetch a lower 6.9-7.7 % that will be paid quarterly.
  • The 5-year recurring deposit has been pegged lower at 7.2%.
  • However, interest on savings deposits has been retained at 4% annually.

The Ministry also has notified that rates of small saving schemes will be linked to government bond yields. The move is expected to prompt banks to lower their deposit rate in line with the small savings rate as offered by government. Since April 2016, interest rates of all small saving schemes are recalibrated on a quarterly on the basis market-linked interest rates system

What are small saving schemes?

Small Savings Schemes are more of social welfare schemes .They are government run schemes that provide higher interest rate. These schemes are meant for small investors backed by a sovereign guarantee and tax benefits.

Tags:

Advertisement

12345...9