Best Investment Plan for Senior Citizens in India

The Indian financial market offers several retirement investment plans to senior citizens and pensioners. Backed by the Government of India, investing in them helps the elderly earn a regular income, and pensioners to augment their pension. Given below are some of these plans.

If you are 60 or above looking for a safe investment product with high returns, then you can opt for senior citizen savings scheme (SCSS). Offering capital protection along with quarterly interest payment as a source of income, SCSS can also be opted by early retirees between 55 to 60 years or those who have availed voluntary retirement scheme (VRS).You can invest in this scheme either individually or jointly with your spouse in a post office or a bank. The maximum amount which can be invested in SCSS is either Rs. 15 lakhs or the amount received as retirement benefit, whichever is lower.You can open this account with payment of cash below Rs. 1 lakh or by cheque for amount above Rs. 1 lakh, and though there’s no limit on the number of investments, the total investment shouldn’t go beyond the maximum investment limit.The government decides the interest rate of SCSS on a quarterly basis. The tenure of SCSS is five years, which can be further extended by three years. You can withdraw prematurely, but only after the account has completed a year. Investment in SCSS qualifies for tax exemption under section 80C of the Income Tax Act, 1961.

A pension scheme that offers guaranteed pay-out of pension for a period of 10 years, the maximum investment limit under Pradhan Mantri Vaya Vandana Yojana (PMVYY) is Rs. 15 lakhs. You can invest in the scheme by paying a lump sum purchase price and can choose to receive pension either monthly, quarterly, half-yearly or yearly.The minimum entry age in the scheme is 60 years. If you survive the policy term, the amount invested along with the final pension is payable to you. However, in case of a mishap during the policy term, the amount is paid to your beneficiary.However, note that unlike the SCSS and other pension schemes, investment in PMVYY doesn’t qualify for tax exemptions. Also, premature withdrawal is allowed only in exceptional circumstances such as treatment of critical illness of self or spouse.

This is another safe investment option for senior citizens and pensioners. Bank fixed deposits (FDs) fetch a higher rate of interest for the elderly than depositors below 60. The rate of interest varies across banks and is fixed throughout the FD’s tenure.However, note that post maturity, the interest income is added to your pension amount and subjected to taxation as per the prevailing tax rate.

The investment avenues above are ideal for senior citizens and pensioners since they are latent to the vagaries of the stock market offering fixed and assured returns.

The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.