Retirement may bring an end to the regular flow of income as you had known it. As a retiree, you may have two choices: either to rely on investments done during your active work life or invest your pension corpus in instruments that can yield good returns regularly. In case you are looking for investment options after retirement, there are two choices backed by the government. One – the Pradhan Mantri Vaya Vandana Yojana (PMVVY) and two – the Senior Citizen Savings Scheme (SCSS). Both these scheme allow maximum investment up to Rs 15 lakh.
Let us understand the two on various parameters:
Eligibility
Both PMVVY and SCSS require an individual to be of 60 or above 60 years of age.
Rate Of Interest
Depending on the mode of pension, PMVVY assures guaranteed returns of 8% for 10 years on a monthly, quarterly, half-yearly or yearly basis. The interest earned is taxable. Under PMVYY scheme, you would need a minimum investment of Rs. 1.44 lakhs for a yearly pension and Rs. 1.5 lakhs for a monthly pension. The SCSS offers 8.7% return per annum, which is payable quarterly.
Tenure
The government backed PMVVY scheme has a tenure of 10 years and SCSS comes with a tenure of 5 years that can be extended by another three years.
Tax Benefits
Investment under PMVVY scheme comes with no tax benefits, whereas investment in SCSS scheme is eligible for tax deduction under Section 80C.
Premature Exits
You can also prematurely exit from the PMVVY scheme in case of critical or terminal illness of self or spouse. The maximum surrender value paid in this case will not exceed 98% of the policy purchase price In case of SCSS, you can prematurely close the account only after you have remained invested in the scheme for a year after a deduction of penalty of 1.5% of the funds. This will attract a penalty of 1% after the completion of 2 years with the account.
Loans
You can avail a loan facility with PMVVY plan after the completion of 3 years and the tenure of the loan will not go beyond 75% of the policy’s purchase price.
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