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Getting old comes with many challenges, both physical and financial. To relieve senior citizens of their financial burdens, the Indian Government has set up various policies and measures for the welfare and social security of its senior citizen population. These pension schemes support senior citizens in creating a steady income and relieve their financial burden.Two of the popular financial assistance plans implemented by the Government are the Pradhan Mantri Vaya Vandana Yojana (PMVVY) and Senior Citizen Savings Scheme (SCSS). Let us understand these schemes in detail.
Pradhan Mantri Vaya Vandana Yojana (PMVVY)
The Pradhan Mantri Vaya Vandana Yojana is a new pension scheme launched by the Government of India, exclusively for senior citizens aged 60 and above. The scheme offers an assured interest of 8% p.a., payable monthly for ten years. The pension amount ranges from Rs. 12,000 p.a. to Rs. 12,0000 p.a. is payable at regular intervals (monthly, quarterly, six-monthly, yearly) as chosen by the pensioner.
Senior Citizen Savings Scheme (SCSS)
The Senior Citizen Savings Scheme (SCSS) is a government-sponsored savings instrument designed to generate income for senior citizens in India. It is a voluntary account that can be opened with a minimum deposit of one thousand rupees or any sum in multiple thereof, subject to a maximum of fifteen lakhs rupees. The Senior Citizen Savings Scheme (SCSS) yields an attractive rate of interest, which usually lingers in the 8% to 8.5% bracket.
PMVVY vs. SCSS
Although both PMVVY and SCSS are centrally-sponsored retirement benefit schemes, they differ in various aspects.
| Basis | Pradhan Mantri Vaya Vandana Yojana (PMVVY) | Senior Citizen Savings Scheme (SCSS) | Winner |
| Policy Term | Assured pension for 10 years | 5 years, with an extension option of 3 years after maturity | PMVVY |
| Frequency of Payout | Monthly, quarterly, six-monthly and yearly, as selected | Quarterly | PMVVY |
| Age of Beneficiary | Only senior citizens of age 60 years and above | Individuals aged 60 years and above or retired employees in the 55-60 years age group, investing their retirement benefits | SCSS |
| Taxability | Interest earned is taxable under the head ‘Income from Other Sources | Interest earned is taxable under the head ‘Income for Other Sources) but the investment amount is eligible for tax deduction u/s 80C | SCSS |
| Yield | Around 8 percent p.a. | Around 8.5 percent p.a. | SCSS |
Which is Better between PMVVY and SCSS?
Both PMVVY and SCSS have their pros and cons. Both the schemes win on certain fronts by providing better flexibility to the subscribers or better returns. It is up to the investors to understand and recognise which factors are more favourable to them and then accordingly make an insightful decision.
DISCLAIMER
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.
