LIC Mops Up Rs 2,000 Cr In Varishtha Bima Scheme

New Delhi, September 16: | Updated: Sep 17 2003, 05:30am hrs
The Life Insurance Corporation (LIC) expects the government to view favourably its demand for 15-year, 10.4 per cent bonds to fund the Varishtha Pension Bima Yojana that offers 9 per cent assured return to the policy-holder, chairman SB Mathur said on the sidelines of a micro-insurance seminar here on Tuesday.

LIC has already mopped up over Rs 2,000 crore under the scheme, an amount that had been targeted for the whole year, against Rs 300 crore so far this year under other pension schemes in its portfolio.

We are only asking for an additional 1 per cent costs that LIC will be incurring on servicing the product, he added. The total transaction cost of the scheme works out to about 9.38 per cent, of which 9 per cent will go assured return, he explained.

The scheme will be reviewed after a year, as per the finance ministers 2002-04 Budget announcement.

While the bonds would have to be in line with the quantum of premium collected, Mr Mathur said he expected the amount coming in next year to be much less.

The scheme was launched on July 14 to mitigate the woes of pensioners suffering from falling interest rates. The government has promised to make good the interest rate differential between the assured return and the actual yield on investment, which was now about 6-7 per cent.

A sum of Rs 30 crore was provided in the budget for the pension scheme, but the subsidy amount was bound to be much more following after the surging response to the offer.