Senior Citizen Savings Scheme vs PMVVY: Which is better for senior citizens?

For a senior citizen, investing in risk-free instrument is most advisable. That why bank Fixed Deposit (FD) is one of the most favoured investment options among the senior citizens. But, the way bank FD interest rate has been nose-diving, the elderly citizens have started to look at other assured return options like Senior Citizen Saving Scheme (SCSS). If a senior citizen is looking for a regular monthly income then Pradhan Mantri Vaya Vandana Yojana (PMVVY) is another good option for the 60 plus elders to park their money. However, if we look at the expert opinion, in SCSS there is more liquidity while in PMVVY there is an assured fixed monthly return available for the investor. They advised senior citizens to have investment in both so that one can have an assured and fixed monthly income and at the same time if there is any financial crisis, one can monetise one’s investment too.

Speaking on SCSS vs PMVVY Kartik Jhaveri, Director — Wealth Management at Transcend Consultants said, “Both in PMVVY and SCSS, interest rate offered is 7.4 per cent. But, in SCSS, one’s interest rate may vary on the quarterly basis while in PMVVY, one’s interest rate is fixed at the time of investment for the entire investment period.” Jhaveri said that in SCSS, investment period is for five years while in PMVVY, the investment period is 10 years

Jhaveri went on to add that in PMVVY, one gets fixed monthly pension on the basis of annual interest rate offered at the time of investment. And in case the investor dies before the maturity period, the invested amount or capital investment will be refunded to the nominee of the investor. He said that in the case of investor survives the 10 investment period, the capital investment will be refunded to the investor.

PMVVY is an LIC plan and as per the LIC website, PMVVY interest rate offered till 31st March 2022 is 7.4 per cent,” said Jhaveri.

Advising investors to look at the liquidity angle too SEBI registered tax and investment expert Jitendra Solanki said, “In PMVVY, one can’t withdraw money before 10 years of maturity period while in the case of SCSS, an investor can withdraw money prematurely paying some penalty. Being a senior citizen, there can be some financial emergency coming in as post-retirement one’s avenue for income becomes limited. So, in my opinion, one should have a diversified investment in both SCSS and PMVVY so that one can have an assured monthly return plus an avenue to address the financial emergency arising in near future.”

Solanki also said that in SCSS, one can start investing after attaining the age of 55 years while in PMVVY one must be 60 years of age to become eligible for investing.

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