Senior Citizen mostly depends on interest income on their savings for their monthly expenses. In times of declining interest rates when interest rates on bank FDs have fallen to abysmally low levels the Government has come out with some schemes for senior citizens to help then earn a minimum amount of return from their savings. One of them being the Senior Citizen Savings Scheme (SCSS) which currently assures a return of 8.4% & an individual can invest a maximum of Rs.15 lakhs after fulfilling certain conditions. One more scheme which the government has come up with is the Pradhan Mantri Vaya Vandana Yojana (PMVVY). The salient features are discussed below:
- PMVVY is a pension scheme for senior citizens (60 years and above) being implemented by Life Insurance Corporation of India (LIC).
- There is a guaranteed interest of 8%-8.3% ( depending on frequency of pension payment) for 10 years and the pension is received at the end of the time period chosen either monthly, quarterly, half-yearly or yearly.
- For yearly pension, the minimum investment is Rs 1,44,578 (Rs.12,000/year payment) and maximum is Rs 7,22,892 (Rs.60,000/year payment). Half yearly mode, the minimum to be invested is Rs 1,47,601 (Rs.6,000/half year payment) and the maximum is Rs 7,38,007 (Rs.30,000/half year payment). Quarterly mode, the minimum to be invested is Rs 1,49,068 (Rs.3,000/quarter payment) and the maximum is Rs 7,45,342 (Rs.15,000/quarter payment). Monthly mode, the minimum to be invested is Rs 1,50,000 (Rs.1,000/month payment) and the maximum is Rs 7,50,000 (Rs.5,000/month payment).
- If pensioner survives policy term, the amount invested along with final pension installment is payable. On death of pensioner during policy term, amount invested is given to beneficiary.
- The scheme allows premature exit during the policy term under exceptional circumstances like for the treatment of any critical/terminal illness of self or spouse.
Sabyasachi Paul has been associated with equity research and advisory on equity markets in India for over 9 years & currently heads the equity research desk of Eastern Financiers Ltd, Kolkata.He also manages a portfolio on the online platform Kristal. Find link to the strategy named ‘The Tortoise’