Amidst the chaos of life, many people focus on making money and forget about making provisions for a secure future.
But, it is never too late to start investing and reap the benefits. Here are six schemes for senior citizens, that can secure their financial interests and ensure a source of income after retirement.
1. The Pradhan Mantri Vaya Vandana Yojana (PMYVVY)
This is a pension plan for senior citizens, managed and operated by Life Insurance Corporation (LIC).
It allows pension seekers to pay a lump sum of money any time after the age of 60. Depending on the amount invested, senior citizens can withdraw a minimum of Rs 1000 to a maximum of Rs 9250 per month. The maximum investment allowed per person is Rs 15 lakh.
The scheme was launched in 2017, until May 31 2020. But, recently it was modified by the Finance Ministry and extended till 31 March 2023.
In the Financial Year 2020-2021, the scheme will provide an assured fixed return rate of 7.40 per cent per annum for a duration of 10 years.
The pension can be claimed in monthly, quarterly, half-yearly, and yearly mode of payments.
If the pensioner dies during the policy term of 10 years, the purchase price will be refunded to the beneficiary.
As a maturity benefit, If the pensioner survives until the end of the policy term, the final pension instalment along with purchase price will be paid.
2. LIC Jeevan Shanti
This scheme was introduced to provide insurance-seekers with numerous options to earn income. The policy is a one-time premium payment plan with return options available in two variants—immediate and deferred annuity.
Immediate Annuity: Returns can be claimed immediately after payment of the premium. It can be received monthly, quarterly, bi-annually and annually.
Deferred Annuity: Returns can be claimed after a specified period. An option of life-risk coverage is provided.
A minimum investment of Rs.1.5 lakh and no maximum limit.
The eligibility criteria range from 30 to 85 or 100 years for an immediate annuity and 79 years and above for deferred annuity schemes.
The immediate annuity plan can be purchased as a self-life or joint-life with spouse, children, siblings or grandparents.
This scheme can be taken for the benefit of handicapped dependent.
After successful completion of one policy year, a loan facility is available.
The policyholder can surrender the policy anytime after completing 3 months. Here annuity along with purchase price is returned.
3. SBI Life Saral Pension Plan
This is an individual, non-linked, participation, savings pension scheme that is focussed on generating income during retirement years. The maximum entry age for this scheme is 65 years.
The scheme offers guaranteed bonuses for the first five years of the policy, at 2.50 per cent for the first three years and 2.75 per cent for the next two.
The plan provides a loan tenure ranging from 10-40 years.
Eligible for Income Tax Benefit—as per applicable income tax laws in India
The minimum premium that you can pay annually is Rs 7500, with no cap on the maximum limit.
The premium benefits can be claimed in a monthly, quarterly, half-yearly, or yearly frequency.
The maturity age for the plan is a minimum of 40 years and a maximum of 70 years.
Minimum sum assured is Rs 1 lakh, with no maximum limit.
Apart from pension schemes, ‘Fixed Deposits’ (FD) are also commonly used by senior citizens as financial instruments to invest their earnings. They prefer depositing large amounts into FD accounts, as the principal investment amount is safer compared to investments in equity.
The State Bank of India, HDFC Bank, and ICICI Bank recently launched special FD schemes only for senior citizens to safeguard their financial interests as interest rates are falling rapidly.
The schemes offered by the three are applicable for new accounts, as well as the renewal accounts. Policies will be available only for a limited period of time until September 30, 2020.
4. SBI WeCare
This scheme is focussed on protecting the income of senior citizens by offering additional interest on Term Deposits.
Features and benefits:
Offers 6.50 per cent interest rate.
One can invest for a minimum of 5 years and a maximum of 10 years.
No tax benefits offered.
Premature withdrawal from the scheme will fetch a 6.2 per cent interest rate.
5. HDFC Bank Senior Citizen Care FD
This FD scheme offers higher interest rates to senior citizens and an additional 75 basis points (bps) for deposits with a tenure of more than 5 years.
Interest rates: 3.5 per cent for deposits maturing in 7 days and 6.50 per cent for deposits maturing in 10 years
In case of premature closure, post 5 years a penalty of 1.25 per cent is levied on the original interest. Before 5 years, a penalty of 1 per cent will be charged.
6. ICICI Bank Golden Years FD
This offers 6.55 per cent interest rates to senior citizens for deposits up to Rs. 2 crores with a tenure of more than five years to 10 years.
Offers 80 basis points (bps), more than what applies to the general public, for deposits with a tenure of more than 5 years to 10 years.
The scheme applies to NRIs as well.
Customers can avail a loan against their FD up to 90% of principal and accrued interest.
A credit card can be availed against their FD.
(Edited by Gayatri Mishra)