Dada-Dadi bonds, LIC’s Varishtha to go together

Finance Minister Jaswant Singh has indicated that the proposed ‘Dada-Dadi bonds’ for pensioners, scheduled to be launched in April, will run side-by-side with LIC’s Varishtha pension Bima Yojana. ‘‘The Varishtha scheme will continue next fiscal. It will be in addition to the proposed Dadi-Dadi bonds,’’ Singh said while seeking to allay fears that LIC’s pension scheme would be discontinued after the new bond was issued.

RBI is working out the modalities of the scheme, which would offer higher return than most of the savings instruments in the country. Pensioners were hit hard by the falling interest rates in the last few years as their only source of income — interest on savings instruments — have gone down drastically. In view of the hardship faced by elders, Singh announced the Dada-Dadi bonds in his ‘mini-budget’ on January 9, which offered higher return to elders.

Last year, government unveiled the subsidised Varishtha scheme to provide a nine per cent assured return to senior citizens in the form of a monthly pension ranging between Rs 250-2,000. LIC has already mopped up Rs 4,500 crore in premium from the Varishtha scheme after selling 2.5 lakh policies, and targets to collect Rs 5,500-6,000 crore by March end.

To continue its support to LIC in the next fiscal for the Varishtha scheme, the Finance Ministry has also decided to increase the subsidy amount for the scheme to Rs 150 crore during next fiscal.