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Sarbajeet K. Sen

"We are getting a large number of queries every day from people below the age of 55 who want to place their surplus funds in the scheme in the name of their parents who are above the cut-off age".

New Delhi , Aug. 20

BREAKING the age barrier, the old-age pension scheme — the Varishtha Pension Bima Yojana — is also turning out into a much sought after assured return investment avenue for the young and those not yet old enough to qualify for the scheme.

According to insurance industry sources, the number of people below the minimum qualifying age of 55 years queuing up to park their funds into the scheme are growing by the day. Insurance brokers dealing with the scheme said that a large portion of LIC's swelling kitty under the scheme might be coming out of people who were not the target group for the scheme.

"We are getting a large number of queries every day from people below the age of 55 who want to place their surplus funds in the scheme in the name of their parents who are above the cut-off age. We are advising them that there is no bar in doing so. As brokers we would stand to lose if we turn away such proposals," a broker said. He said that a large number of those who had come up with such queries had ultimately come back to place their monies in their parent's name.

Brokers said that the shrinking investment avenues and the comparatively high return of nine per cent that is backed by a Government assurance had been prime mover in the younger lot seeking cover under the scheme through the back door. Moreover, they pointed out that the scheme had the added incentive of a loan facility against the deposit made.

On another front, the brokers said that `one person per family' norm laid down by Life Insurance Corporation (LIC) for availing of the benefits under the scheme was being broken in a large number of cases. LIC is the sole administrator appointed by the Government for the scheme.

The intermediaries said that the decision to lay down the stipulation of only one person per family might have been flawed from the very beginning since neither LIC nor the Government possessed the wherewithal to detect its circumvention.

"The market has quickly learnt that there is no way that LIC or the Government can track down all the families where more than one person is availing of the scheme. In any case, as long as the collection under the scheme increases why should LIC or anybody else want to put a spoke in the wheel," a broker said.

Under the Varishtha Pension scheme, which was launched by the Government recently, any person above the age of 55 years can make a lump-sum payment to earn a minimum pension of Rs 250 per month and a maximum of Rs 2,000 per month. The one-time premium payment under the scheme works out to Rs 33,355 at the lowest level and Rs 2,66,665 at the highest.

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