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Planning for your financial future is important, especially to secure your old age. And it should be done at a time when you are still capable of working hard and contributing more towards a plan or investment. Though you may not think about your retired life just after joining a job, you must consider the same at some point in life when you still have enough working years in hand.
One very important aspect why everyone should plan and save enough for the future to secure their old age is the medical or healthcare reason. The cost of healthcare services is on a constant rise as seen over the last few years. Elderly people without enough means to earn find it difficult to avail good healthcare services due to the huge medical expenses.
Hence, to aid such elderly people, the government of India has taken many initiatives. Among them include the pension schemes for the elderly to allow them a certain amount of financial support.
Let us discuss two of such pension plans offered by the Indian government namely, Senior Citizen Savings Scheme and Pradhan Mantri Vaya Vandana Yojana.
Senior Citizen Savings Scheme or SCSS is a government-backed savings plan crafted particularly for the financial security of the elderly in the country. SCSS provides Indian residents of 60 years and above with a regular income after their retirement. The scheme invests the deposits for a 5-year term, which can be extended for 3 more years.
The scheme aims to organize small savings and turn them into regular returns together with offering tax benefits and investments options.
SCSS is a savings cum investment plan that suits best for senior citizens. The plan offers a high rate of interest. Below are some benefits of the plan:
Below are the eligibility criteria for Senior Citizen Saving Scheme:
To open an SCSS account in India, you need the documents mentioned below:
Another good plan offered by the government of India for the elderly is the Pradhan Mantri Vaya Vandana Yojana. This is a non-linked and non-participating pension scheme with a rate of interest that is approved by IRDAI. The PMVVY scheme offers a loan facility, which could be recovered from the pension amount payable under the plan. The PMVVY interest rate is close to 8% per annum.
Below are the benefits offered under the policy:
Below are the criteria of eligibility under this plan:
|Tenure of policy||10 years|
|Premium paying term||10 years|
|Premium payment mode||Yearly, semi-yearly, quarterly and monthly|
|Age of entry||60 years|
|Age of maturity||70 years|
|Grace period||30 days|
|Sum assured||INR 1,11,000 available|
|Liquidity||Loan is available|
Below are the differences between SCSS and PMVVY to know the plan better:
|Tenure of policy||5 years (can be extended for 3 more years)||10 years|
|Premium payment frequency||Quarterly||Yearly, semi-yearly, quarterly and monthly|
|Age of entry||60 years and above or 55 – 60 years (in some cases)||60 years and above|
|Taxability||Tax benefits available||Tax benefits available|
|Return||7.4% annual interest rate||1,11,000 maximum Sum Assured|
To Sum Up
Be it SCSS or PMVVY, both the plans have their benefits and disadvantages. The benefits offered under the two plans can be availed during your retirement years. Moreover, both these plans are government backed and offer guaranteed returns.
Further, a policyholder can use a PMVVY or SCSS calculator to calculate the maturity amount under these plans.
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Both the plans have their own unique benefits. However, the SCSS allow the facility of easy premature withdrawal options which are less stringent as compared to PMVVY.
Some of the best plans for senior citizens include;
Senior Citizen Savings Scheme (SCSS)
Pradhan Mantri Vaya Vandana Yojana (PMVVY)
Post Office Monthly Income Scheme (POMIS) etc.
The last date to invest in PMVVY is March 31, 2023.
Section 80C of the Income-tax Act, 1961 allows a deduction for contributions to SCSS.
Limited Access to Money and Premature Exit options are its limitations
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