New Delhi, May 20 (IANS): In good news for the senior citizens, the Union Cabinet chaired by Prime Minister Narendra Modi has approved the extension of the Pradhan Mantri Vaya Vandana Yojana (PMVVY) till March 31, 2023.

A government release said that the Cabinet approval for its extension would enable old-age income security for senior citizens for three more years beyond March 31, 2020.

According to the government, PMVVY scheme, implemented through the Life Insurance Corporation (LIC), is intended to give an assured minimum pension to senior citizens (60 years and above) based on an assured return on the purchase price or subscription amount.

The assured rate of return for fiscal 2020-21 has been pegged at 7.4 per cent per annum and thereafter to be reset every year, an official release said after the Cabinet meeting.

Earlier, the scheme offered an assured return of 8 per cent.

It said that government's financial liability is limited to the extent of the difference between the market return generated by LIC and the guaranteed return of 7.4 per cent per annum initially for the year 2020-21, and thereafter to be reset every year in line with Senior Citizens Saving Scheme (SCSS).

The expenses on managing the scheme are capped at 0.5 per cent of assets under management per annum for the first year of the scheme, and 0.3 per cent per annum for second year onwards for the next nine years.

"As such, the expected financial liability will range from an estimated expenditure of Rs 829 crore in the 2023-24 fiscal to Rs 264 crore in last FY 2032-33," the release said.

The average expected financial liability for the subsidy reimbursement, calculated for annuity payment on actual basis, is expected to be Rs 614 crore per year for currency of the scheme, it added.

The actual interest-gap (subsidy) would however depend upon the actual experience in terms of number of new policies issued, the quantum of investment made by subscribers, actual returns generated and the basis of annuity payment, the release said.

The scheme was announced in Union Budget of 2017-18 and 2018-19. In 2018-19 Budget, the maximum investment limit under PMVVY was doubled to Rs 15 lakh per senior citizen.

Pension is payable at the end of each period during the policy term of 10 years, as per monthly, quarterly, half-yearly, yearly frequency, as chosen by the pensioner at the time of purchase.