Summary of this article
LIC’s Varishtha Pension Bima Yojana offered guaranteed annuity payouts to senior citizens.
The scheme stopped accepting new applications from 2018.
The government has said there is no proposal to exempt VPBY from tax.
The Varishtha Pension Bima Yojana (VPBY) from Life Insurance Corporation (LIC) of India was re-launched in 2014 to ensure social security for senior citizens. The pension plan offered assured payout at certain frequencies, such as monthly, quarterly, half-yearly, and annually, and was open to all senior citizens (60 years and above) without any upper age limit. The scheme offered immediate annuity to subscribers in accordance with the chosen frequency and full refund of the purchase price to the beneficiary or nominee upon the pensioner’s demise.
However, the scheme was withdrawn in 2015-16. In January 2017, it was opened again for subscription, but only for one year.
On a question by Lok Sabha Member of Parliament Joyanta Basumatary, Pankaj Chaudhary, the Minister of State in the Ministry of Finance, gave a written reply, on the details of the scheme. He said the scheme had a total of 343,231 beneficiaries across India as on January 31, 2026. The top five states with the maximum number of beneficiaries were Maharashtra (75,407), West Bengal (52,515), Gujarat (38,133), Tamil Nadu (29,806), and Karnataka (24,872), Chaudhary added.
The minimum pension payout under the scheme is Rs 6,000 per annum, and the maximum is Rs 60,000. The most attractive part of the scheme is that it guarantees an assured pension based on the guaranteed return of 8 per cent per annum. Although the pensioner is required to pay a one-time premium to receive a guaranteed pension for 10 years from the LIC policy, the government promises to provide an annual subsidy to LIC in case of a shortfall in its return.
As the scheme was first launched in 2003, the government has given Rs 3,424.21 crore in subsidies since then and Rs 1,410.22 crore since 2024-15.
On the question of whether the government has any plans to bring the scheme under the exempt category for tax purposes, Chaudhary confirmed that there is “No such proposal is under consideration.”
Other Schemes For Senior Citizens
In May 2017, the government launched another scheme offering similar pension benefits, Pradhan Mantri Vaya Vandana Yojana, but that scheme remained open for subscription only until March 31, 2023.
At present, the Senior Citizens Savings Scheme (SCSS) offers a guaranteed return at certain frequencies with a maximum permitted deposit of Rs 30 lakh. This is like a fixed deposit (FD), and its rates are reviewed and revised every quarter. As of now, SCSS offers a deposit rate of 8.20 per cent per annum, which is higher than what is typically offered in bank FDs.
