As senior citizens can’t afford to risk their hard-earned savings, it is always better for them to invest in schemes that offer guaranteed returns. Senior citizens should explore risky options like mutual funds only after they have maxed out investment in safer schemes.
There are two schemes, namely PMVVY and SCSS, that offer guaranteed returns and peace of mind. Both these schemes are backed by the Government of India. These schemes can work as a safe source of regular interest income. Here’s a look at important features of both schemes that senior citizens should know:
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PMVVY
Pradhan Mantri Vaya Vandana Yojana (PMVVY) is administered by LIC. It is a Government-subsidised pension scheme for senior citizens aged 60 years and above.
Senior citizens can invest up to Rs 15 lakh in PMVVY for monthly/quarterly/half-yearly/yearly pensions. The PMVVY account holders can get a pension under the scheme for 10 years. While the interest amount is paid as a pension under the scheme, the principal amount is returned after the completion of 10 years.
The current interest rate on PMVVY deposits is 7.4% per annum payable monthly. By buying the PMVVY plan with Rs 15 lakh, senior citizens can get a guaranteed Rs 9250 monthly pension for 10 years.
NOTE: PMVVY scheme will be available only til March 31, 2023.
SCSS
Senior Citizen Savings Scheme (SCSS) is also one of the best schemes for monthly, quarterly half-yearly or annual pensions. The return on investment under SCSS is guaranteed by the Government of India.
SCSS scheme is currently being administered by the Post Office and some banks like SBI. A senior citizen can invest up to Rs 15 lakh under SCSS. The scheme pays the interest on investment on a periodic basis while the principal amount is returned on maturity.
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The SCSS account provides interest on the invested amount for a period of 5 years. Senior citizens can apply for a one-time extension of three years within one year of the maturity of the account.
The current interest rate for SCSS deposits is 7.6%.
