SBI Bank Pension Plan – ADS | NPS | APY | Special Term Deposit
What is SBI Pension Plan in 2021?
Once you reach a specific life-stage, you will have to start thinking about your life after retirement and start planning for it.
In fact, Retirement planning is the process of appraising your present assets to determine your potential income sources,
estimating future expense to determine how much money you will need post-retirement based on your expenses and goals.
Therefore, If you are looking for hassle free retirement planning with a disciplined approach to it,
latest Pension Plan from SBI (i.e. State Bank of India) could be a good option.
The objective of investing in an SBI pension plan is to protect the future years of life and secure a regular income after retirement.
Retirement plans offer you with financial independence, allowing you to live your life with pride even after retiring.
A good retirement pension plan can help maintain your and your family’s living standard,
as well as combat the increasing inflation and the overall high cost of living.
There’s another characteristic that you always keep in mind when it comes to your retirement plans.
Not only do you wish to avail of income tax benefits but also look for tax free income when your plans reach maturity.
Therefore, when it comes to retirement plan with State Bank of India, people usually choose from the below listed four plans:
- SBI Annuity Deposit Scheme
- National Pension Scheme – Government of India
- Atal Pension Yojana – Government of India
- SBI Special Term Deposit
Let’s try and understand the basics of the SBI pension plan, the benefits they offer, and help you make a call on the one that’s best suited to your individual income and requirement.
SBI Annuity Deposit Scheme
State Bank of India (SBI) the largest lender in the country, offers an Annuity Deposit Scheme to enable the customer to pay a one-time lump sum amount and to receive the same in EMIs (i.e. Equated Monthly Instalments).
As per SBI official website, the scheme is transferable between SBI branches.
Here are key things to know about Annuity Deposit Scheme
- An individual should be a resident which could include a minor. However, The mode of holding could be jointly or single. Anyone falling into the category of NRE can’t access this scheme.
- To enable the customer to deposit one time lump sum amount and get re-payment of the same
in monthly annuity instalment including part of the principal amount along with interest.
- The rate of interest is the same as applicable to the fixed deposits (FD) of tenure as opted by the depositor.
- The scheme can be invested in for a period of 36 or 60 or 84 or 120 months.
- The minimum deposit is based on a minimum monthly annuity INR 1,000/- for the respective period. Though, there’s no maximum there’s no maximum deposit limit.
- The rate applicable to all Senior Citizens of age 60+ years will be 0.50 per cent above the applicable rate. However, staff & pensioners of SBI will be 1 per cent above the applicable rate.
- Payment of annuity On the anniversary date of the month following the month of deposit.
- Nomination facility is available with the this scheme.
- Premature payment is permitted only in the event of the death of the depositor.
- Under special cases or situation, the scheme grants overdraft or loan for a maximum of 75 per cent of the annuity balance amount.
- Interest payable is subject to Tax Deducted at Source (TDS) for Annuity deposit.
SBI National Pension Scheme
The National Pension Scheme is a pension scheme launched by the Government of India to help Indian citizens create a retirement corpus.
Under NPS, you can make systematic contributions in a profitable avenue that would provide you market-linked returns and a regular income in your post-retirement life.
Any individual citizen of India between the age of 18-60 years can join this scheme.
However, NRI is also eligible to join NPS.
NPS allows subscribers to choose SBI Pension Fund Managers that are appointed by PFRDA (i.e. Pension Fund Regulatory and Development Authority of India).
SBI proposes two types of offline and online service for investing in the National Pension Scheme.
Under SBI NPS, there are two primary account categories—Tier 1 and Tier 2.
Here are key things to know about NPS account.
|Features||Tier I||Tier II|
|Option of selection of the Account||Mandatory||Optional|
|Withdrawal Process||Conditional & Restricted Withdrawal||Quick and Efficient Withdrawal|
|Minimum Contribution at the time of A/c opening||INR 500/-||INR 1000/-|
|Minimum amount of subsequent contribution||INR 500/-||INR 250/-|
|Minimum Contribution Required per year||INR 1000/-||Nil|
|Minimum no. of contribution per year||One only||Nil|
|Frequency of contribution permitted||Unlimited||Unlimited|
|Tax Benefits for Corporates and Corporate employees||*For Employer Prospect: Contributions made by the employer (i.e. up to 10% of Basic + DA) is allowed as a business expense under Section 36(1) of IT Act 1961.|
*For Employee Prospect: Employees own contribution is eligible for tax deduction presently, u/s 80CCD of IT Act up to 10% of salary (Basic + DA). This is within the overall ceiling of ` 1.50 Lakhs u/s 80 CCE of the IT Act.
Subscriber is allowed tax deduction in addition to the deduction allowed u/s 80CCD(1) for additional contribution in his NPS account subject to maximum investment of ` INR 50,000/- u/s 80CCD 1(B).
*For Self- Employed/Businessman:
20% of the Gross Income is eligible for tax deduction u/s 80 CCD (1) of IT Act.
Atal Pension Yojana
- Every State Bank of India’s customer, who is aged 18 or above and is below 40 years is eligible to apply for SBI Atal Pension Yojana (i.e. SBI APY).
- For applying the API, It is mandatory for the applicants to have a SBI Savings Account with registered mobile number.
- Only customers who are outside the income tax slab can reap the benefits of this scheme.
- As per the mandate of the Government of India, the APY provides a pension of INR 1000/- to INR 5000/- to the beneficiary after the subscriber turns 60.
- The State Bank of India allows one to register for the APY either by visiting the branch or through net banking facility.
- The amount is deducted online from the subscriber’s account on a monthly/quarterly/half-yearly basis.
The amount varies from INR 42 and INR 1,454 per month.
Apart from pension plans, ‘SBI Special Term Deposit’ are also commonly used by senior citizens as financial instruments to invest their earnings.
They prefer depositing large amounts into deposit accounts, as the principal investment amount is safer compared to investments in equity.
SBI Special Term Deposit
- A special Term Deposit(i.e. sTD) for Senior Citizens introduced in the TD segment wherein an additional premium of 80 bps will be paid to Senior Citizen’s on their retail TD for ‘5 Years and above’ tenor only.
- The minimum period of deposit is 6 months, and the maximum period is 10 years.
- The minimum deposit amount is INR 1,000/- and thereafter in multiples of INR 100/-.
- Under this scheme, regular interest is added to the principal and compound interest calculated and paid thereon.
- The scheme carries an additional interest of 80 basis points (bps) for term deposits (TD).
- Premature withdrawal with penalty is available.
- Nomination available in favour of an individual only.
- TDS is applicable as per IT Rules.
- You can avail a loan/overdraft against your deposit. However, the bank provides you with a loan/ overdraft up to 90% of your deposit amount at nominal cost.