Pradhan Mantri Vaya Vandana Yojana Plan 856 is a government-backed pension scheme specifically designed for senior citizens to provide them financial security through guaranteed pension payments. This unique scheme was operated by the Life Insurance Corporation of India (LIC) and aimed to offer a steady income to citizens aged 60 and above.

What is Pradhan Mantri Vaya Vandana Yojana Plan 856?

Pradhan Mantri Vaya Vandana Yojana Plan 856 is a pension scheme launched by the Government of India for senior citizens aged 60 years and above. The scheme provides a fixed return on a one-time investment, guaranteed for a period of 10 years. The pension is paid monthly, quarterly, half-yearly, or yearly as per the policyholder’s choice.

This scheme is administered by LIC of India and guarantees a return of approximately 7.4% per annum payable monthly (equivalent to about 7.66% per annum if pension is paid yearly). The invested amount (purchase price) is returned to the policyholder at the end of the 10-year term or to the nominee in case of the policyholder’s death during the term.

Launch and Withdrawal Dates

• Launch Date: 26th May 2020
• Withdraw Date: 31st March 2023

The scheme was available for purchase during this period. After withdrawal, no new policies could be bought under Plan 856. However, existing policyholders continue to receive pensions and benefits as per the original terms.​

Key Features of PMVVY Plan 856

• Target Group: Senior citizens aged 60 years and above.
• Policy Term: 10 years.
• Pension Rates: Fixed and guaranteed rates decided by the government at purchase.
  • Monthly mode: 7.4% per annum
  • Quarterly mode: 7.45% per annum
  • Half-yearly mode: 7.52% per annum
  • Yearly mode: 7.66% per annum
• Purchase Price Limit: Maximum Rs. 15 lakhs can be invested under this scheme per senior citizen.
• Pension Payment: Paid regularly at the end of each period through NEFT or Aadhar Enabled Payment System.
• Loan Facility: Loan up to 75% of the purchase price is available after 3 years.
• Surrender Value: Allowed only in specific cases like critical or terminal illness with 98% of purchase price being refunded.
• Death Benefit: In case of the pensioner’s death, the purchase price is refunded to the nominee immediately and the policy terminates.
• Maturity Benefit: On completion of term, the purchase price along with the last pension installment is returned to the pensioner.
• Tax Benefits: The maturity and death claim amounts are tax-free; however, the pension income is taxable.​

Benefits of the Scheme

• Guaranteed Pension: Provides assured monthly income to senior citizens, offering them financial security.
• Safety of Investment: Being a government-backed scheme operated by LIC ensures safety of the invested amount.
• Flexibility in Pension Modes: Policyholder can choose pension payment frequency as per convenience.
• Loan Facility: Enables policyholders to avail loan against the policy amount in times of need.
• Protection for Family: On death, the purchase price is fully refunded to nominee, providing peace of mind.
• Exemption from GST/Service Tax: Premiums under PMVVY are exempt from GST which makes it more affordable.​

Who Should Consider PMVVY?

This plan is ideal for senior citizens who:

• Seek a safe and reliable monthly income after retirement.
• Prefer government-backed schemes with minimum risk.
• Want a fixed pension rate without market-linked fluctuation.
• Have a lump sum amount up to Rs. 15 lakhs to invest.
• Need liquidity through loan facility in emergencies.

PMVVY suits people who value stability and security over higher but uncertain returns.

How to Use the Pradhan Mantri Vaya Vandana Yojana Plan 856 Calculator?

A PMVVY calculator helps you estimate how much pension you will receive for the amount you invest or vice versa. Here is how it works:

• Input your desired monthly (or other frequency) pension amount: Specify how much pension you wish to get periodically.
• Select the pension payment mode: Monthly, Quarterly, Half-yearly, or Yearly.
• Enter your age and investment amount: Usually for seniors 60 and above, the maximum pension amount is capped.
• Calculate: The calculator will provide the lump sum investment amount required or the periodic pension you can expect for your investment.

For example, if you want a monthly pension of Rs. 9,250, you will need to invest approximately Rs. 15,00,000 under the monthly mode to receive this pension for 10 years.​

Example Calculation

If you invest Rs. 1,000,000 (10 lakhs) under the monthly pension mode, using the rate of 7.4%, your approximate monthly pension will be:

Monthly Pension=127.4%×10,00,000=6,167Rs.

You will receive Rs. 6,167 every month for 10 years. After 10 years, your principal investment of Rs. 10 lakhs will be returned to you as maturity benefit.​

Important Points to Remember

• Pension rates are guaranteed only for the purchase year. Rates for future years may change if a new scheme is launched by the government.
• The purchase amount should not exceed Rs. 15 lakhs per senior citizen.
• The scheme offers flexibility in pension payment but note the slightly different returns based on payment frequency.
• Surrendering the policy is restricted and only allowed under critical illness circumstances.
• Loan facility is valuable in times of emergency but interest on loan will be deducted from pension payments.
• The scheme is tax-friendly but pension income is taxable under the income tax regime.

How to Buy PMVVY Plan?

• Offline Purchase: Visit any nearest LIC branch and fill the proposal form along with identity and address proof.
• Premium Payment: Single premium payment is made at the time of purchase.
• Documentation: Submit necessary documents, including proof of age (60 years or above).
• Policy Issuance: After verification, the policy will be issued, and payments will start as per selected mode.

Frequently Asked Questions

Conclusion

Pradhan Mantri Vaya Vandana Yojana Plan 856 was a trusted government-backed pension scheme for senior citizens providing guaranteed returns for 10 years with flexibility in pension payments. Though the scheme was withdrawn on 31st March 2023, it offered a reliable option for senior citizens seeking a safe and steady pension income during its active period.

A PMVVY Plan 856 calculator enables users to estimate the pension amount they can receive based on their investment or helps determine the amount to invest to get a desired pension. Understanding the plan’s features, benefits, eligibility, and calculation method can help senior citizens make informed financial decisions for their retirement.