Varishtha Pension Bima Yojana (2014) – a Senior Citizen’s pension scheme by the Govt

VARISHTHA PENSION BIMA YOJANA (VPBY) was a Government subsidized scheme announced for Indian Citizens aged 55 years and above, in the Union Budget 2003-04 (Atal Vajpayeeji’s tenure). Now, this plan will be re-launched by the current central government.


When the scheme was launched in 2003, over 3 lakh people had purchased annuities generating a corpus of Rs 6,095 crore. The main features of old plan were as below.

  • Indian Citizens aged 55 years and above were eligible.
  • One time premium payment of Rs 33,000 fetched a lifelong monthly pension of Rs 250.
  • One time premium payment of Rs 2.66 Lakh would give a lifelong monthly pension of Rs 2000
  • The offered return was 9% p.a.
  • In the event of unfortunate demise of the pensioner (policyholder), the premiums paid (purchase price) will be returned to the nominee/legal heir of the pensioner



The current central government is re-launching the above scheme. The main features are:

  • Indian Citizens aged 60 years and above were eligible.
  • The plan will be open for subscription from 15-Aug-2014 to 14-Aug-2015
  • One time premium payment of around Rs 66,665/- fetches a lifelong monthly pension of Rs 500.
  • One time premium payment of Rs 6,66,665/- would give a lifelong monthly pension of Rs 5000 (maximum).
  • Ceiling of maximum pension is for a family as a whole i.e. total amount of pension under all the policies issued to a family under this plan shall not exceed the maximum pension limit. The family for this purpose will comprise of pensioner, his/her spouse and dependents.
  • Policyholder can opt for monthly, quarterly, half yearly or yearly pension payment.
  • The assured return is 9% p.a. Effective annually yield works out to 9.38% for monthly pension.
  • In the event of unfortunate demise of the pensioner (policyholder), the premiums paid (purchase price) will be returned to the nominee/legal heir of the pensioner.
  • The pension income is taxable in the hands of pensioner. The tax rate depends on his/her income tax slab.
  • Life insurance Corporation (LIC) will be the exclusive administrator for the scheme.
  • Loan (up to 75% of subscribed amount) can be availed after 3 years from the Date of Commencement.
  • Loan up to 100% after 15 years
  • The policy can be surrendered after completion of 15 years. The Surrender Value payable will be refund of Purchase Price. However, under exceptional circumstances, if the pensioner requires money for the treatment of any critical/terminal illness of self or spouse then the policy can be surrendered before the completion of 15 years and the Surrender Value payable shall be 98% of Purchase Price.
  • Pension Payment will be through ECS or NEFT.

Required Documents for Varishtha Pension Bima Yojana Plan:

  • One passport size photo of the proposer (life assured).
  • Copy of the Photo ID proof
  • Copy of Address proof
  • Any certificate to confirm the Date of Birth
  • Bank passbook copy / Cancelled cheque
  • If the premium amount is more than Rs1 Lakh then source of income documents compulsory (like Income Tax Returns etc.,)

Premium Chart (table) for Varishtha Pension Bima Yojana scheme:


Important points to consider before opting for VPBY:

Premium:  The main target group for these kind of plans are lower income group and rural families. The premium amount is a one time payment and locked up. The pensioners cannot withdraw the amount to meet any unforeseen expenditure. If you have limited retirement corpus or income generating options then think twice before you opt for this plan.

Individuals who are recently retired: An Individual who has just retired may still has long life expectancy. It may not be prudent to straight away go for pension plans like these. The main financial goal for a retiree would be to get a stable income. But at the same time, this income also has to grow every year to meet the raising expenses (especially food/medical). The rate of income growth should atleast meet (if not beat) the rate of inflation growth.

Retirees who have taxable income: For retirees who are in taxable income brackets, better options would be debt mutual funds or tax-free bonds.

Stable Income: Senior citizens who can not manage the retirement corpus on their own and want stable returns can opt for this plan.

This plan Vs Bank Deposits: The current interest rate on bank deposits for Sr. Citizens is around 9.5 to 10%. This rate may look attractive. But they may vary from year to year. Someone who is seriously looking to invest the retirement money in Bank Fixed deposits may consider this plan.

Considering the rate at which the inflation (medical,food prices etc.,) is rising, the retirees are better off in identifying a product mix which can beat the inflation rate. These investment options can be identified based on the risk taking capacity, age and goals. Retirees who are aged above 75 years may find these type of pension plans more suitable.

Latest Update (25-Nov-2017) : As per the recent Govt’s notification, an individual eligible for receiving the benefit under the VPBY Scheme is hereby required to furnish proof of possession of Aadhaar number.

The marketing capabilities of the current central government and LIC may make this product a success story. But end of the day, it is your heard-earned money. Consider above points before you invest.

Continue reading latest post : ‘PMVVY (Pradhan Mantri Vaya Vandana Yojana 2017-2020) : Govt’s New Pension Scheme for Senior Citizens | Review.’



  • MS RAo says:

    Dear sir,
    Varishta Pension Bima Yojan now its available, whom to approach about this schem.

  • s says:

    I have one question, My father is retired, There is no source of income. only pension income is around 1000 p.m., we are three sisters. do you have an idea Government has scheme for retired person who doesn’t have any source of income

  • Manoj Kumar says:

    Please tell me how to apply for the pension for 60 years old person.


  • RAVI SV says:

    Dear srikanth,
    good morning,
    i am aged 60 years, just retired from a private organisation, and i going to get PPF soon.
    i like to get Rs 35000/00 per month for me and my wife living.
    so please suggest me how to invest in.
    Ravi sv,
    chennai,Ph: 8754590492

  • azmad says:

    Which documents are required for this yojna

  • Pranajal says:

    My Father age is 62,can he invest in Varishtha Pension Bima Yojana scheme,is this scheme is open in 2016 also?

  • Neha says:

    Hi, My Father have 2 years left from retirement. He works for private company. Due to some circumstances he could not do much investment. After retirement he will get 5K as a pension from respective company. He is looking for permanent income between 30k to 40k. Can you suggest some pension scheme or other avenues where he can invest with low risk and fixed income.

    • Dear Neha,
      Not advisable to invest in a Pension scheme now.
      Let me know the quantum of lump sum investment that he can afford to invest now, his age and other financial goal(s) if any??

  • sai says:

    My father opted for this plan and it’s been 30 days we didn’t receive the Varistha Yojana Pension bond. Generally how long it will take for LIC to Issue the bond?


  • k.kanakabhaskara says:

    how much age limit and relaxation

  • Hoshiar Singh Negi says:

    Dear sir,
    I retired n getting pension (including all allawances) around Rs. 7000/- pm and I intend to subscrib this pension scheme, may I, how I may n what I should DOB is 5-1-1949. pl direct me.
    thanks sir.

    • Dear Hoshiar,
      This scheme is open for subscription till 14-Aug-2015.
      If you wish to subscribe to this plan, kindly visit the nearest LIC branch. One time premium payment of Rs 6,66,665/- would give you a monthly pension of Rs 5000.
      Kindly let me know if you need any other details.


    Will investment amount inVARISHTHA PENSION BIMA YOJANA (2014-2015) Plan play any role in reducing IT slab?

  • Ishver Dhokai says:

    If I want to invest 3times to meet maximum limit,or it allows me to invest one time only.
    My self and my wife both are senior sitize, can we both invest and get total pension of Rs 10000=00?
    Please reply.

  • uday says:

    what is the impact of I.T.on single premium premium u/r v.p.b.y .while making a payment to purchase a policy say 66666/-
    what is the impact of I.T.on receiving a pension of Rs.5000/-p.m. from next month
    my age is 63 yrs. & I’m an income tax payee
    Thanks & regards

    • Sreekanth Reddy says:

      Uday – This scheme does not come under Section 80c or Section80ccc, so no tax benefits are available. Also the pension received should be added as your income and is taxable.

  • usha k iyer says:

    i am a sr. ctzn. .. and i am not in a position to invest 6,Lakhs right now… can i invest a small amount say 2L and then over a period of time reach the amount of 6,66.669 ?
    does the plan allow this…??

  • khushi says:

    M fathers age is 62 ….there is no tax returns proof as in…as his income is hardly 5000rs per mth…& if we want to invst 666665 for once …than is it posibl…plz rply….

  • G V Seshagiri says:

    Good scheme for senior citizens over 75 years since one can eliminate all the hassles of renewals , keeping track etc.

    • Sreekanth Reddy says:

      G V Seshagiri – For senior citizens who are above 75 years and who are not comfortable with interest rate fluctuation can surely consider this plan. But it is advisable to consider other fixed income options ( like Sr. Citizens FD, Post Office Sr.Citizens’ Savings Scheme etc.,) also before taking decision. As these products provide liquidity to your investment.

  • Dr P M Deshpande says:

    My wife is already a subscriber to the 2004 scheme, paying Rs. 2.55 lakh.
    Can she increase the contribution to Rs. 6.66 lakh?

    • Sreekanth Reddy says:

      Deshpande – 2014 & 2004 are two different schemes. I believe your wife has to apply to the new scheme separately.

  • Chakradhar says:

    hi, is this plan from LIC or govt?

    • Sreekanth Reddy says:

      Chakradhar – This plan is floated by the Govt. LIC has been given the sole privilege to execute and operate this scheme.

  • Subrahmanian S H says:

    I’m 78 years of age from July 26.
    I would like to make a premium of Rs Rs 6,66,665/-. TODAY.
    From what date I’ll get Rs 5000/– as pension.


    • Sreekanth Reddy says:

      Subrahmanian – The first instalment of pension shall be paid after 1 year, 6 months, 3 months or 1 month from the date of purchase of the same depending on the mode of pension payment i.e. yearly, half-yearly, quarterly or monthly respectively. Kindly note that the pension payment will be made through ECS or NEFT only.

  • Gur Darshan Kapur says:

    Also educate me on debt Mutual Funds.Which are those.?

    • Sreekanth Reddy says:

      Gur Darshan Kapur ji – About Debt Mutual Funds Schemes,these schemes generally invest in fixed income securities such as bonds, corporate debentures, government securities (gilts), money market instruments, etc. and provide regular and steady income to investors. The debt funds can be short term,long term,hybrid,dynamic,Fixed maturity plans, Monthly Income plans etc.,

  • Gur Darshan Kapur says:

    I am a retired defence personnel who was working post retirement in corporate sector,but had to leave at 63yrs due to wife’s illness. I cleared IRDA exam thru’ Max Insurance Co Ltd. The agents have made this noble profession something that people hate.False promises of hi gains have misled people at large. My daughter who is a banker has told me to quit immediately.I am in dilemma.Could you suggest some better option.I was thinking of joining non life insurance like Health insurance or as an aviation surveyor as I have aviation background of 40 yrs +.Pl advise.
    GD Kapur

    • Sreekanth Reddy says:

      Gur Darshan Kapur – You are involved in two very noble professions. If you have conviction that you can provide unbiased advice to your prospects/clients then do not leave the insurance profession. It is a rewarding career in terms of job satisfaction and money wise. You may consider providing advice on multiple financial products.
      Considering your vast work experience, i am sure you will achieve success.

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