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Viability doubt on pension scheme

New Delhi, July 8: The insurance regulator has said the financial viability of a proposed pension scheme for senior citizens is of more concern than the upper-age limit prescribed.

“It (age limit of 79) is not an issue at all. LIC is already selling other immediate annuity policies wherein the age limit is more than 79 years,” a senior official of the Insurance Regulatory Development Authority said.

The official was speaking about the Varistha Pension Bima Yojana, scheduled to be launched on July 14.

“There are other serious issues of concern, including the high 9 per cent rate of return promised by the insurer, despite government subsidy. LIC has been constantly trying to convince us that they can afford it and will keep their solvency margin intact. Things are still being worked out,” the official said.

Finance minister Jaswant Singh had said the government would reimburse the Life Insurance Corporation the difference between its earnings from the scheme and the assured 9 per cent returns.

The scheme was announced in the budget as an assured-return scheme for senior citizens between 55 and 79. They were worried that returns on their investments were dipping with bank rates sliding.

Earlier, former authority chairman . Rangachary had suggested to the Centre to issue a bond with 9 per cent return instead of dragging LIC into formulating an unviable policy.

Government planners came up with the pension scheme after senior citizens approached the Prime Minister.

The pension payable every month would range between Rs 250 and Rs 2,000. For minimum pension, the policyholder need pay only a lumpsum of Rs 33,000. An investment of Rs 2.77 lakh would yield the maximum pension.

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