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False start to LIC scheme

New Delhi, June 17: The Life Insurance Corporation of India today postponed the launch of the Varishtha Pension Bima Yojana, an assured return pension scheme for the benefit of senior citizens announced by finance minister Jaswant Singh in this year’s budget.

“The launch has been postponed as Prime Minister Atal Bihari Vajpayee is pre-occupied with his trip to China. It will now be done in mid-July,” LIC officials said. However, sources in LIC also indicated that the government has mis-calculated the subsidy portion to be given to LIC.

Earlier, the finance ministry had allocated a mere Rs 30 crore as subsidy for the current fiscal. But sources said, “One single corporate agent pre-booked more than one lakh policies which itself amounted to a subsidy of approximately Rs 70 crore.”

The unique selling proposition of this pension scheme is a guaranteed annual return of 9 per cent. However, in order to sustain this return, the insurer will need a subsidy of at least Rs 300 crore, which is 10 times higher that the earlier allocated subsidy, said LIC officials.

The scheme was announced in the budget as an assured return scheme for senior citizens between the age group of 55-79 who have been increasingly getting worried about the returns on their investments with the Reserve Bank following a soft interest rate policy.

Singh had said that the difference between the actual yield earned by LIC on the funds invested under the scheme and the assured return of 9 per cent would be reimbursed to the insurer annually by the government.

The minimum and maximum pension payable every month under this scheme is Rs 250 and Rs 2,000. The pension-holder will have to pay a sum of Rs 33,000 to get the minimum benefit and a hefty Rs 2.77 lakh to get maximum pension benefit. The scheme also has a provision of return of purchase price to the nominee in the event of the pensioner’s death.

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