Most of the time, seniors place their retirement savings in risk-free areas. They don’t want to risk their savings in uncharted territory. For a safe bet, they deposit their money in the mail, government-related programs, or opt for term deposit programs to earn regular income after retirement.
LIC Pradhan Mantri Vaya Vandana Yojana (PMVVY) and Senior Citizen Savings Scheme (SCSS) are such policies which ensure higher fixed interest to seniors. It can be confusing for retirees to choose between PMVVY and SCSS. Let’s understand PMVVY and SCSS in detail to understand better.
LIC Pradhan Mantri Vaya Vandana Yojana is a pension scheme for people over the age of 60 that provides a guaranteed pension for 10 years. The Center launched the LIC Pradhan Mantri Vaya Vandana Yojana last year in May. Under the terms and conditions of this plan, the guaranteed pension rates for policies sold during a year will be reviewed and decided at the start of each year by the Ministry of Finance.
On the other hand, the Senior Citizen Savings Scheme (SCSS) is a government sponsored retirement benefit program. The objective of the system is to help seniors by ensuring them a regular flow of income after retirement. It guarantees returns on a quarterly basis. SCSS can be availed from banks and certified post offices in India.
In the PMVVY, for the first fiscal year, the plan insures an interest rate of 7.4 percent per annum payable monthly. On the other hand, SCSS offers a rate of 7.4 percent per annum for the quarter running April-June.
For the PMVVY, the insured annuity rate is payable for the duration of the 10 year policy for all policies written up to March 31, 2022. The loan facility is also available after the end of 3 policy years. The maximum loan that can be granted is up to 75 percent of the purchase price. While for the SCSS, the investment period is 5 years, with an option to extend for an additional 3 years.
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For the PMVVY, the minimum pension includes Rs 1,000 per month; Rs 3,000 per quarter; Rs 6,000 per semester; and Rs 12,000 per year, while the maximum pension includes Rs 9,250 per month; Rs 27,750 per quarter; Rs 55,500 per semester; and Rs 1,11,000 per year. However, the total amount of the purchase price under the plan authorized for an elderly person must not exceed Rs 15 lakh. However, age is the most important criterion here. A person, who has reached a minimum age of 60 years, cannot purchase this policy. On the other hand, SCSS is a safe and reliable investment. Gives high returns compared to FD or savings account, and at the same time, it offers tax benefit of up to Rs 1.5 lakh.
The PMVVY and SCSS plans currently offer an interest rate of 7.4 percent. The lock-up period in the PMVVY for the full 10 years after you buy it. In SCSS, the investment period is 5 years and can be extended. So, depending on your needs, you decide which one will suit you best!