Saving and investing are necessary for every individual, irrespective of age. However, the value of the same is the highest for pensioners and individuals approaching retirement. There are many saving schemes for senior citizens in India to choose from.
Here we have covered the top 5 best saving schemes for senior citizens in India:
1. Senior Citizens Saving Scheme (SCSS)
- SCSS is a government-backed scheme that provides both retirement and pension benefits. It has a lock-in period of 5 years extendable for 3 years within one year of maturity.
- The interest rates are declared by the Ministry of Finance every quarter. The rates for the quarter from January to March 2021 were 7.4%.
- The scheme has a minimum deposit amount of ₹ 1,000 and a maximum deposit amount of ₹ 15,00,000.
- Also, the scheme qualifies for tax exemption under Section 80C, while the interest income is taxable over the amount of ₹ 50,000.
2. National Savings Monthly Income Scheme (MIS)
- MIS is a low-risk investment scheme that offers regular income to investors. It has a lock-in period of 5 years.
- The interest rates are revised every quarter with the interest rate for January to March 2021 being 6.6% p.a.
- The scheme has a minimum deposit amount of ₹ 1,500 and a maximum deposit amount of ₹ 4,50,000 per individual. However, the maximum limit for a joint account is ₹ 9,00,000.
- The scheme also allows premature withdrawals after one year of opening the account with a penalty.
3. National Savings Certificate (NSC)
- NSC is a 5-year long scheme having a minimum deposit amount of ₹ 1,000 and no maximum limit.
- The scheme offers the interest of 6.8% compounded annually payable at the time of maturity.
- The deposit amount also qualifies for deduction under section 80C of the Income Tax Act.
- The scheme allows withdrawal only after the completion of 5 years except in conditions like a court order, death of the subscriber, etc.
4. Tax-free bonds
- A tax-free bond is a low-risk option to generate regular income that is issued by NHAI, Indian Railways Finance Corporation, NTPC, etc.
- The interest received from bonds ranges between 5.5% to 6.5%. The interest generated from such bonds is also tax-free.
- The bonds have to be locked in until maturity. However, they can be sold on the stock exchange if the subscriber wishes.
5. Pradhan Mantri Vaya Vandana Yojana (PMVVY)
- PMVVY is a scheme for senior citizens managed by Life Insurance Corporation of India under the purview of the Government of India.
- Presently, the scheme offers interest of 7.4% p.a. payable monthly for a tenure of 10 years.
- The minimum deposit amount for the scheme is ₹ 1,50,000 and the maximum amount is ₹ 15,00,000.
- The subscriber of the scheme is eligible to avail of a loan against the deposit amount after three years. The amount of a loan can be up to 75% of the initial deposit price.