LIC Senior Citizen Scheme: 5 Retirement Saving Plans

Life Insurance Corporation of India (LIC) is the largest and one of the leading life insurance companies in India. The company is catering to the various insurance and investment needs of people for more than five decades. With its presence in every corner of the country and also internationally, makes the insurance accessible for everyone. LIC offers products for all sections of society and people of all ages including senior citizens. Along with diversified product portfolio, various insurance schemes introduced and promoted by the government of India are operated by the Life Insurance Corporation of India (LIC).

Saving Schemes for Senior Citizen

Considering the old age problems and the falling rate of interest, the government has been taking various initiatives to safeguard the interest of senior citizen investors. Government’s various schemes for senior citizens are launched by the LIC, under which citizen’s above 60 years of age can avail regular income in the form of pension by investing in such plans. Let’s take a look into various LIC senior citizen schemes.

1. Pradhan Mantri Vaya Vandana Yojna

Pradhan Mantri Vaya Vandana Yojana is a government’s pension plan for senior citizens which is launched by LIC on 4th May 2017. The plan is exclusively designed for people above 60 years of age with a guaranteed interest of 8% (8.3% p.a effectively) for 10 years.

The amount to be invested in the Pradhan Mantri Vaya Vandana Yojana is referred to as ‘purchase price’. The scheme is introduced after the huge success of LIC senior citizen scheme – Varishtha Pension Bima Yojana. The policy is available for purchase till 31st March 2020. The policy offers exclusive benefits and various other attractive features.

Features and Benefits of Pradhan Mantri Vaya Vandana Yojna:

1. Most important features of Pradhan Mantri Vaya Vandana Yojna
   1. No maximum age for opting for this scheme. Any citizen of India more than 60 years of age can opt for this scheme
   2. It provides an assured pension for a period of 10 years
   3. This scheme gives an assured return of 8% p.a. computed monthly (thus equivalent to 8.3% p.a.) on the invested corpus
   4. Maximum of INR 15 lakhs can be invested by each senior citizen under this scheme. Earlier the limit was INR 7.5 lakhs per senior citizen which now has been increased.
      
      
2. Other features of Pradhan Mantri Vaya Vandana Yojna:
   1. Pension modes:
      1. The annuitant has the flexibility to choose the preferable mode of pension payment – yearly/half-yearly/quarterly/monthly at the time of availing the annuity. 
      2. The first instalment of pension will start after a month for monthly mode, three months for quarterly mode, six months for half-yearly mode or one year for annual mode, depending on the payment mode chosen.
      3. The plan offers security as the pension payments are made through NEFT or Aadhaar Enabled Payment System, i.e. AEPS mode.
         
         
   2. GST Exemption:
      The scheme is exempted from the Goods and Services Tax (GST)
      
      
   3. Purchase:
      The policy can be purchased online as well as offline by visiting any of the LIC branches
      
      
   4. Loan:
      Policy offers liquidity with loan facility after completion of three policy years for up to a maximum of 75% of the purchase price. The loan interest (10% payable half-yearly) will be recovered from pension instalment payable and the outstanding loan will be recovered while paying claim proceeds.
      
      
3. Exclusions:
   There are no exclusions under the policy, including suicide. In any event of death, the purchase price is paid to the nominee and the policy is terminated.

Benefits of Pradhan Mantri Vaya Vandana Yojna:

1. The policy offers death benefits, pension and maturity benefit
   
   
   1. Death benefit –
      If the pensioner dies during the 10 years of the policy term, then the beneficiary or the nominee will be entitled to receive the purchase price as a death benefit.
      Thus, this policy guarantees a minimum of 10 years of the annuity
      
      
   2. Pension during the policy tenure of 10 years–
      Pension is paid to the pensioner as long as he is alive for a period of 10 years
      
      
   3. Maturity benefit after the policy tenure of 10 years–
      If the pensioner survives till the end of 10 years of the policy term, purchase price along with final pension instalment shall be payable
      
      
   4. Surrender benefit —
      In certain cases, like terminal illness of the pensioner, premature withdrawal is allowed in this scheme and 98% of the purchase price is returned
      

Income Tax Implications of Pradhan Mantri Vaya Vandana Yojna:

1. The plan does not offer tax benefits under Section 80C of the Income Tax Act on the amount invested. 
2. The interest earned in the scheme is taxable in the hands of the annuitant and hence subjected to income tax.
3. There is no GST in this scheme as this was exempted from Service Tax before 1st July 2017.

Eligibility Criteria for Pradhan Mantri Vaya Vandana Yojna

	Minimum	Maximum
Entry age	60 years	No limit
Policy term	10 years
Pension Yearly Half-yearly Quarterly Monthly	12,000 per year 6,000 per half-year 3,000 per quarter 1,000 per month	1,20,000 per year 60,000 per half-year 30,000 per quarter 10,000 per month
Purchase price (the basis of mode of pension) Yearly Half-yearly Quarterly Monthly	INR. 1,44,578 INR. 1,47,601 INR. 1,49,068 INR. 1,50,000	INR. 14,45,783 INR. 14,76,015 INR. 14,90,683 INR. 15,00,000

The ceiling of maximum pension is per senior citizen. Let’s say the family has two senior citizens – husband and wife. Each of them can invest a maximum of up to INR. 15, 00,000 into Pradhan Mantri Vaya Vandana Yojana. That means together the family can invest INR. 30, 00,000 into the scheme.

Sample Pension Rate for Pradhan Mantri Vaya Vandana Yojna

Pension rates vary depending on the age and mode of pension payment chosen. Following is the sample rate for INR. 1000 purchase price.

Mode of pension payment	Pension rate
Yearly	INR 83.00 p.a.
Half-yearly	INR 81.30 p.a.
Quarterly	INR 80.50 p.a.
Monthly	INR 80.00 p.a.

2. LIC Varishtha Pension Bima Yojana

LIC Varishtha Pension Bima Yojana was introduced by the government as a pension scheme for senior citizens. The scheme was available for investment from 15th August 2014 to 14th August 2015. The scheme operated by LIC was exclusively meant for senior citizen investors aged 60 years and above. However, LIC senior citizen scheme -Varishtha Pension Bima Yojana scheme is an immediate annuity plan which is not available for investment now as it was open for a limited period.

Features and Benefits of LIC Varishtha Pension Bima Yojana

1. Most important features of LIC Varishtha Pension Bima Yojana
   1. There is no upper ceiling on the entry age. Anyone above 60 years of age can invest in this plan.
   2. The scheme is a single premium immediate annuity plan for senior citizen investors that provides a lifelong income stream.
   3. The policy provides immediately assured pension with a guaranteed interest rate of 9.00% p.a monthly (9.30% p.a effectively) on the invested corpus
   4. Maximum limit of investment into the plan is INR. 6,66,665 per family.
      
      
2. Other features of LIC Varishtha Pension Bima Yojana
   1. Pension modes:
      1. The annuitant has the flexibility to choose the preferable mode of pension payment – yearly/half-yearly/quarterly/monthly at the time of availing the annuity
      2. The first instalment of pension will start after a month for monthly mode, three months for quarterly mode, six months for half-yearly mode or one year for annual mode, depending on the payment mode chosen
      3. The plan offers security as the pension payments are made through ECS or NEFT mode
         
         
   2. Loan:
      The policy offers liquidity with loan facility after completion of three policy years for up to a maximum of 75% of the purchase price. Loan interest will be recovered from pension instalment payable and the outstanding loan will be recovered while paying claim proceeds
      
      
   3. Flexibility:
      The pension scheme can be tied up with other schemes such as mutual funds, provident fund and endowment plans etc. to receive sizeable regular income
      

Benefits of LIC Varishtha Pension Bima Yojana

1. Death benefit: On the death of the pensioner, the purchase price (the amount invested) is refunded to the beneficiary.
   
   
2. Pension: lifelong pension payment will be made regularly as per the mode is chosen.
   
   
3. Surrender benefit: policy can be surrendered after completion of 15 policy years. Then, the purchase price will be refunded on surrendering the policy. However, in exceptional cases like critical illness/terminal illness of self or spouse, policy can be surrendered within 15 years. 98% of the purchase price will be refunded.
   
   
4. Income tax implications of LIC Varishtha Pension Bima Yojana
   1. Income tax benefit can be claimed under Section 80CCC of the Income Tax Act for the invested amount
   2. Interest income receivable under the scheme is taxable.
      

Eligibility Criteria for LIC Varishtha Pension Bima Yojana

	Minimum	Maximum
Entry age	60 years	No limit
Pension Yearly Half-yearly Quarterly Monthly	6,000 per year 3,000 per half-year 1,500 per quarter 500 per month	60,000 per year 30,000 per half-year 15,000 per quarter 5,000 per month
Purchase price (the basis of mode of pension) Yearly Half-yearly Quarterly Monthly	INR. 63,960 INR. 65,430 INR. 66,170 INR. 66,665	INR. 6,39,610 INR. 6,54,275 INR. 6,61,690 INR. 6,66,665

(Please note: the ceiling of maximum pension is for a family as a whole)

Sample Pension Rate for Varishtha Pension Bima Yojana

Pension rates vary depending on the age and mode of pension payment chosen. Following is the sample rate for INR. 1000 purchase price.

Mode of pension payment	Pension rate
Yearly	INR. 93.80 p.a.
Half-yearly	INR. 91.70 p.a.
Quarterly	INR. 90.67 p.a.
Monthly	INR. 90.00 p.a.

Pradhan Mantri Suraksha Bima Yojana

Pradhan Mantri Suraksha Bima Yojana is one of the government’s social security schemes which allows senior citizens to invest. The scheme basically provides accidental death insurance cover at a very minimal rate of premium. The cover is provided for one year period, which can be renewed year on year thereafter. Let’s take a look at the scheme details.

Entry age	18 years to 70 years
Premium	INR. 12 p.a.
Sum payable on death	INR 2,00,000
Policy period	1 year (renewable every year)
Date of implementation	1st June 2015

3. Pradhan Mantri Atal Pension Yojana

Pradhan Mantri Atal Pension Yojana was introduced with a specific objective, mainly targeting unorganised sector of the society. The scheme is aiming to ensure no one in the country lives with financial insecurity in their old age. Following are some of the main features and benefits of Pradhan Mantri Atal Pension Yojana.

Key Features and Benefits of Pradhan Mantri Atal Pension Yojana

1. Any one between the age of 18-40 years can invest in the plan for a minimum of 20 years to reap the benefits in their older age i.e. after 60 years of age.
2. Chosen fixed amount of pension (INR.1,000,INR.2,000,INR. 3,000,INR. 4,000 and INR. 5,000) will be paid on attaining 60 years age.
3. Period contribution depending on the pension amount chosen needs to be made by the investor for the term chosen (minimum of 20 years).
4. Policy provides an option to increase the premium at your will.

4. LIC New Jeevan Nidhi

LIC New Jeevan Nidhi is a deferred annuity plan that is designed to provide savings and protection along with the benefit of pension. with life stage based pension options, the plan is quite flexible for the investors.

Key Features of LIC New Jeevan Nidhi

1. As the plan is participating plan, investors are entitled to bonuses.
2. Flexibility to choose the premium payments -regular or single premium
3. Enhance the coverage with additional riders – accidental death and disability benefit rider
4. 5% Guaranteed additions for the first five years followed by simple reversionary bonus and final additional bonus from 6th year.
5. Policy offers high sum assured rebate – INR. 3,00,000 and above

Benefits of LIC New Jeevan Nidhi

1. Death benefits: 
   1. Death during the first five years of the policy – benefit payable to nominee is sum assured accrued guaranteed additions. These benefits can be paid in lump sum or as an annuity or partially ( lump sum + annuity)
   2. Death after the first five years of the policy – benefit payable to nominee is sum assured + accrued guaranteed additions simple reversionary bonus + final additional bonus.These benefits can be paid in lump sum or as an annuity or partially ( lump sum + annuity)
      
      
2. Vesting benefits:
   Vesting corpus is equal to sum assured + accrued guaranteed additions + simple reversionary bonus + final additional bonus. These benefits are offered in three ways to the investor.
   1. Commute 1/3rd of the vesting corpus tax-free and purchase immediate annuity with the remaining corpus
   2. purchase an immediate annuity plan with the entire tax-free corpus
   3. purchase a single premium deferred annuity plan with the entire tax-free vesting corpus
      
      
3. Tax benefit:
   1. Amount invested qualifies for tax deduction under Section 80CCC of the IT Act
   2. Lump sum benefits payable are exempted from income tax under Section 10(10D) of the IT Act.
      

Eligibility Criteria for LIC New Jeevan Nidhi

	Minimum	Maximum
Entry age	20 years	58 years -Regular premium ; 60 years – single premium
Vesting age	55 years	65 years
sum assured Regular premium Single premium	INR. 1,00,000 INR. 1,50,000	No limit No limit
policy term Regular premium Single premium	5 years 7 years	35 years 35 years

5. LIC New Jeevan Shanti

LIC New Jeevan Shanti is non-linked, non-participating single premium annuity plan that comes with multiple annuity options. The plan offers great flexibility with various benefits for senior citizens in their golden age. 

Key Features and Benefits of LIC New Jeevan Shanti

1. Fixed pension payouts at regular intervals for lifelong with one-time premium payment
2. Policy offers two annuity options – immediate annuity and deferred annuity which are further divided into various options (12 more to be precise) to cater to every unique requirement of investors
3. plan can be purchased in both online and offline modes
4. Loan facility can be availed on these plans after one year. However, it depends on the annuity option chosen
5. There is a special provision for reduction of minimum investment if the policyholder has handicapped dependent
6. Premium paid qualifies for tax deduction under Section 80CCC of the Income Tax Act

Eligibility Criteria for LIC New Jeevan Shanti

	Minimum	Maximum
Entry age	30 years	79 years
deferment term	1 year	20 years
Investment amount	INR.1,50,000	No limit
Vesting age	31 years	80 years