Good Income Option for Senior Retired Citizens From Government Schemes

It is always difficult to find a good income option for retired persons who do not have any income option and nil risk appetite . There are few below which may help our senior retired people.

1) Senior Citizen Savings Scheme

 Interest rate: 8.1% p.a. paid out quarterly.

Investment Period: 5 Years

Investment Limit: Min- Rs1000, Max-Rs15 lacs

Where to purchase: Post Office, All Nationalized banks and ICICI bank

Eligibility Criteria: 60 years and above; Retirees above 55 can apply within 1 month of VRS/Superannuation.

Pros: Account can be extended for 3 years after its normal term. Investment amount qualifies for deduction under section 80C up to Rs1.5 lacs. Nomination facility is available. Premature withdrawal allowed after 1st year with 1-2% penalty charge. Interest rates locked for the entire term.

Cons: Interest pay-out frequency is quarterly, not monthly. Interest earned is taxable as per income tax bracket. 

2) Pradhan Mantri Vaya Vandana Yojana

Interest rate: 8.3% p.a. yearly, 8.1% p.a. half-yearly, 8.05 p.a. quarterly and 8% p.a. monthly.

Investment Period: 10 years

Investment Limit: Min- 1.44 lacs Max- 7.5 lacs

Where to purchase: Life Insurance Corporation of India (LIC)

Eligibility Criteria: 60 years and above

Pros: Various pay-out frequencies available. Loan offered against scheme. Interest rates are locked for the whole term.If you like to take yearly once interest then you need to deposit 7.22 lakh instead of 7.5lakh.Plan can be bought from LIC

Cons: Investment not eligible for tax deductions. Withdrawal allowed only for medical emergencies.

Investment tenure is long.

3) Bank Fixed Deposits for Senior Citizens

Interest rate: 7%-8% (including the extra returns offered to senior citizens)

Investment Period: 1 year to 10 years

Investment Limit: Up to 1 Crore

Where to purchase: Any private or public sector bank.

Eligibility Criteria: 60 years and above

Pros: Various pay-out frequencies available. Interest rates are locked for the whole term. Loans available against deposits.

Cons: Investment not eligible for tax deductions except for 5-year deposits offering tax deductions to the extent of Rs1.5 lacs under section 80C.  Premature withdrawal will attract penalty charges of 1% to 2%. Tax saving deposits cannot be withdrawn until completion of tenure.