SBI has rationalized interest rate on all savings bank accounts to a flat 3%, It has also cut the interest rates on fixed deposits for the second time in a month to 5.9% for 5 years and up to 10 years and 6.4% for 5 years and up to 10 years for senior citizens. In such a falling interest rate scenario it is advisable to lock in a scheme which gives a higher rate of return for the long term. I truly advocate that one should Chase one’s Passion and not Pension.
There is one good option available up to 31 st March 2020 for senior citizens – Pradhan Mantri Vaya Vandana Yojana. Pradhan Mantri Vaya Vandana Yojana is a government-backed Pension plan for Senior citizens announced by the Government of India which aims to provide regular pension to senior citizens.
The scheme will avail guaranteed 8% return in monthly mode and 8.3% return in yearly mode. The plan can be purchased from the Life Insurance Corporation of India (LIC).
Advantages of PMVVY are:
- The minimum age of entry in PMVVY is 60 years. The term of the scheme is 10 yrs.
- The loan facility is available after completion of 3 policy years.
- Like other pension schemes, you don’t need to collect the pension amount. The pension would be transferred to the pensioners’ bank account through NEFT or AEPS (Aadhar Enabled Payment System).
- On survival of the PMVVY policyholder to the end of the policy term of 10 years, Purchase price along with final pension installment shall be returned on maturity.
For example, if someone invests Rs.15 lakhs today, he will get an immediate pension of Rs.10000 per month for the next 10yrs and after that, he will get a refund of Rs.15 lakhs that he has invested.