Continuing its focus on social security, the Union Budget announced an assured pension scheme for senior citizens.
CONTINUING ITS focus on social security, the Union Budget announced an assured pension scheme for senior citizens. Last week, the Cabinet had given its approval to Varishtha Pension Bima Yojana offering 8% per annum guaranteed rate of return for 10 years.
Presenting the Budget, finance minister Arun Jaitley said, “LIC will implement a scheme for senior citizens to provide assured pension, with a guaranteed return of 8% per annum for 10 years. For senior citizens, Aadhaar based smart cards containing their health details will be introduced. A beginning will be made through a pilot in 15 districts during 2017-18.”
Senior insurance industry officials have applauded the move. “In today’s time when interest rates on bank fixed deposits and public provident fund are coming down, this move will give relief to senior citizens. However, we have to see the fine print as the last such scheme by LIC was a single premium plan and interest was guaranteed for lifetime,” a senior insurance company official said.
Budget 2014-15 had announced such a scheme, post which Life Insurance Corporation of India (LIC) had launched its single premium Varishtha Pension Bima Yojana. That scheme collected over R7,000 crore and offered lifelong pension at 9.3% per annum, providing monthly pension of R500-5,000. Pension payments started immediately. Even during the last term of the NDA government, the same scheme was introduced as a pension scheme for senior citizens and it collected around R6,000 crore.
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Today’s Budget also lifted the 5% tax deducted at source (TDS) on commissions payable to individual insurance agents whose income is below the taxable limit. “I propose to exempt them from the requirement of TDS subject to their filing a self-declaration that their income is below taxable limit,” said Jaitley.
“Exempting individual insurance agents from TDS on commission, subject to their income being below taxable limit is heartening. Insurance agents play an integral role in creating awareness and selling insurance products. It is a long-pending demand of the insurance industry that has been fulfilled in this Budget,”said Sandeep Patel, CEO & MD, Cigna TTK Health Insurance.