LIC Pension Scheme vs Senior Citizen Saving Scheme: Check Benefits

Check the benefits, rates of two safe investment options for individuals who are 60 or above.

Image used for representation only.

(Photo: iStockphoto)

The COVID-19 pandemic and the subsequent nationwide lockdown in India has taken a great toll on the economy and millions of jobs across the country. The pandemic has also affected our elderly population, who often depend on bank FDs for a regular, constant income.

Amid falling interest to protect the economy, here are two safe investment options for individuals who are 60 or above – Senior Citizens Savings Scheme and LIC Pradhan Mantri Vaya Vandana Yojana.

Pradhan Mantri Vaya Vandana Yojana (PMVVY)

The Life Insurance Corporation of India (LIC) has recently modified the interest rates of Pradhan Mantri Vaya Vandana Yojana. It is for any individual who is 60 years of age or above.

The PMVVY scheme has a policy term of 10 years and the pensioner can choose monthly, quarterly, half yearly or yearly mode of pension.

For those investing in this pension scheme in this financial year, it will fetch 7.40 percent per annum payable monthly interest for entire duration of ten years.

One can invest up to Rs 15 lakh in this pension scheme. For a pension of Rs 12,000 per annum, one should invest at least ₹1,56,658. An investment of ₹1,62,162 can fetch a minimum pension amount of ₹1000 per month under the scheme, according to LIC.

Senior Citizens Savings Scheme

Launched in 2004, this savings scheme is considered one of the simplest investment options. Any individual of the age 60 or above can avail benefits of this scheme.

Any individual who is 55 years or more but less than 60 can avail this scheme if they have opted for voluntary retirement. Defence personnel who are above the age of 50 can also avail this benefit.

One can open an account under this scheme with a minimum deposit of Rs 1,000. The limit can go up to Rs 15 lakh. The deposit in the account should be in the multiples of Rs 1,000. Banks also provide the option of opening accounts jointly with the spouse under this scheme.

Accounts under this scheme have a tenure of five years. The investor can extend the account for three more years after the investment reaches maturity.

Investments of up to Rs 1.5 lakh is eligible for deduction under section 80C of the Income Tax Act.

However, interest earned from the scheme is fully taxable. If interest earned is more than Rs 40,000 in a financial year, tax deducted at source (TDS) is applicable to the interest earned.