Varishtha Pension Bima Yojana 2017 (VPBY 2017) was approved by Prime Minister Narendra Modi on Tuesday. This pension scheme programme will give a monthly interest of 8 per cent to the senior citizens regardless of the changes in the market conditions. This is to be done by the state-owned Life Insurance Corporation who will provide this fixed interest per cent for a period of 10 years. There is an option to to choose for pension on monthly, quarterly, half yearly or annual basis. This scheme is to assure senior citizens of social security and protect them from the changes in the market which might affect their returns. The interest rates will be for deposits upto 7.5 lakhs. Usually banks decrease the interest rate when the deposited amount is higher. The scheme is looking to avoid that. The announcement for on this decision was made on December 2016 by Narendra Modi to the nation. Now it has been approved.
The differential return will be paid to LIC as subsidy i.e. the difference between the rate generated by insurer and the 8 per cent interest given. A maximum amount of deposit has not been fixed even though a figure was announced by the Prime Minister on his New Year’s eve speech. The subscription for this pension will be open for a period of one year from its date of launch. Very little risk is associated with this investment as it is initiated by the central government. The financial planners still need more information on this programme to make further conclusions.