The Life Insurance Corporation (LIC), which will launch the Varishtha Pension Bima Yojana soon, is targetting to mop up over Rs 1,000 crore from the scheme in the first year.
Finance Minister Jaswant Singh had announced the scheme in the Union Budget for 2003-04, promising a 9 per cent assured return for pensioners and those above 55 years.
According to government officials, while the details of the scheme were being firmed up, the pension plan would entail an upfront payment of around Rs 2.5 lakh to receive a monthly sum of Rs 2,000. The yield on the corpus has been linked to the prevailing interest rate on 10-year government paper which is at present 6.5 per cent.
The government has, however, assumed an interest rate of 7 per cent for the moment and has committed to bridge the 2 per cent gap through a budgetary support of Rs 30 crore during 2003-04. Officials said that LIC had sought only Rs 20 crore for the purpose but a further decline in interest rates has been factored in while making the allocation.
As a safeguard against misuse of the assured return benefit, LIC is expected to stipulate that the policy cannot be gifted by individuals to the elders. Those above 55 years would have to buy the policy themselves.
