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Good Income Option for Senior Retired Citizens From Government Schemes

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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. 
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 Tax saving deposits cannot be withdrawn until completion of tenure.

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