Senior citizens of the country are mostly dependent on bank fixed deposits for regular income. Nowadays they are facing hard times due to declining interest rates. But for those who are looking for an alternative and want to invest their funds for the long term, pension plans could be a good idea, especially when it is expected that in the long-run inflation and interest rates would fall.
Here are six schemes that one can consider for retirement planning:
Pension plans are a type of investment plan, which help you to accumulate a part of your savings over a long-term period. Some companies also offer a life insurance cover.
The Public Provident Fund (PPF) is the most popular tax-saving investment. It is available for the general public. PPF allows a maximum annual investment of Rs 1.5 lakh, is completely tax-free and has a lock-in period of 15 years that can be extended indefinitely by blocks of five years. Currently PPF gives an interest rate of 7.1%, which is one of the highest.
Atal Pension Yojana (APY) came into effect from June 2015, in order to create a universal social security system for all, especially the poor, under-privileged and the workers in the unorganised sector.This scheme is available for all Indian citizens between the ages of 18-40.
The subscribers can get pension starting from Rs 1,000 per month to Rs 2,000, Rs 3,000, Rs 4,000 and Rs 5,000 per month after the age of 60 years, depending upon their contribution during the subscription period.
National Pension System (NPS) is one of the most popular tax-friendly government sponsored retirement cum investment schemes. All citizens between 18 to 70 years of age can join the scheme regardless of their gender or income-based criteria. An individual can invest till the age of 77 years.
Through NPS an individual can build a big corpus for himself/herself. Employees working in the government except armed forces staff, private, public, and unorganised sectors can subscribe to this scheme. Investing in NPS can get you extra tax deduction up to Rs 50,000.
Pradhan Mantri Vaya Vandana Yojana is an immediate pension scheme, which pays out a pension at the assured rate of return. The scheme is designed specifically for senior citizens, who are above the age of 60 years.
It is currently offering an annual rate of 7.4%. The policy is for the period of 10 years.
Senior Citizens Savings Scheme (SCSS) is one of the most popular investment instruments among senior citizens. It is a government-backed retirement benefits program for those who are above 60 years of age. It offers the highest return at 7.4% per annum payable quarterly subject to maximum limit up to Rs 15 lakh.
The tenure of the scheme is five years. But the account can be extended for further three years.