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Senior Citizen: Top 4 Risk-Free Saving Schemes with Best Comparison

Senior Citizen: Top 4 Risk-Free Saving Schemes with Best Comparison

Senior Citizen

The complete portfolio for a senior citizen needs to deliver a balance between both earnings and growth. However, this also depends on the wishes of every individual.
Senior citizens require an investment alternative that enables them to experience the luxuries of retired life.
A senior citizen needs to maintain a balance of risk-free and stable choices to earn enough and additionally safeguard the capital.

Also ReadSBI Bank Pension Plan – ADS | NPS | APY | Special Term Deposit

Top 4 Risk-Free Senior Citizen Saving Schemes

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Here are the Top 4 investment options to build a retiree portfolio.

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Senior Citizen: Top 4 Risk-Free Saving Schemes with Best Comparison

Pradhan Mantri Vaya Vandana Yojana (PMVVY)

PMVVY – Pradhan Mantri Vaya Vandana Yojana is available to senior citizens in its new change.
Being the only financial institution allowed to mobilize funds in the Pradhan Mantri Vaya Vandana Yojana, the Life Insurance Corporation has come out with the details of the PMVVY.
PMVVY is recently extended by the government of India for another 3 financial years till March 2023.
To invest one may approach any agent (offline) or buy it directly from the LIC’s website (online).
The addition of PMVVY will come as a relief to senior citizens’ investors as the interest rate on bank FD seems to be falling in a hurry.

New Rules of PMVVY scheme

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  • The large change in the new version is the reduced pension rates. The changed PMVVY scheme will carry a lesser interest rate on the investment than before.
  • Unlike in the older version of the scheme, in the changed PMVVY, the interest rate will keep varying depending on the financial year in which the investment is made.

Payment of Purchase Price

PlanMinimum Investment(INR)Maximum Investment(INR)Minimum Pension(INR)Maximum Pension(INR)
Yearly1,56,65814,49,08612,0001,11,000
Half-yearly1,59,5714,76,0646,00055,500
Quarterly1,61,07414,89,9333,00027,750
Monthly1,62,16215,00,0001,0009,250

Also ReadHow to Buy PMVVY Scheme via Online without Agent?

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Senior Citizens Fixed Deposit Scheme (Senior Citizen FD)

Senior Citizens Fixed Deposit Scheme is a type of Fixed Deposit where you can get a tax deduction (Section 80C of the Income Tax Act, 1961) on investments.
Investors can claim a maximum deduction of INR 1.5 lakh per financial year by investing in these Tax-Saving FD.

Bank FDs are popular choices among senior citizens Investors because once you invest in a Fixed Deposit, you can cash the interest on a monthly, quarterly, or yearly basis.
The lock-in period is 5 years, and the best part is that senior citizens receive a higher rate of interest (depending on banks) on their deposits. This gives an extra push to increase savings.

Also ReadGovernment of India Pension Scheme for Old Age or Parents – Guaranteed Pension

Best Tax Saving FD Rates

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Bank NameInterest rate (%) Compounded qtrly
DCB Bank6.6%
Indusind Bank6.5%
RBL Bank6.3%
IDFC First Bank6%
Karur Vysya Bank5.9%
Interest rates as on July 7, 2022

Also ReadAtal Pension Yojana SBI : Eligibility | Features | Online & Offline | Chart

RBI Bonds for Senior Citizens

The government of India has announced the again launch of the floating rate savings bonds scheme.
This bond was launched after 7.75% taxable savings bonds were withdrawn on May 28.
The government came with a new offering, Which is a 7-year bond, which will be open for subscription from July 1, 2020, though retains many of the features of its predecessor, has changed the terms and conditions of payment of interest to the investors.

The attractive feature of the Bonds is higher interest rates. The interest rates are re-set half-yearly, & the current interest rate on the Bonds is higher as compared to NSC (currently 6.8%), FD with Banks, and Public Provident Fund (currently 7.1%).

The Interest rate on RBI Bonds 2022 for the period July 1, 2022, to December 31, 2022, and payable on January 1, 2023, remains at 7.15% (6.80%+0.35%= 7.15%), unchanged from the previous half-year.

Floating Rate Savings Bonds is risk-free as it is offered by the GOI (Government of India). The Bonds provide another investment option for risk-averse investors and for investors seeking to diversify their portfolios.

Also ReadRBI Bonds 2021 or Floating Rate Savings Bonds | Rate of Interest | Online & Offline

Senior Citizen Savings Scheme(SCSS)

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SCSS stands for Senior Citizen Savings Scheme & SCSS has been effective from 2-August-2004.
The scheme is primarily focused on senior citizens & offers a regular stream of income with the highest safety & attractive interest rate along with tax-saving benefits (Section 80C of the Income Tax Act, 1961).

Senior Citizen Savings Scheme is an Indian government investment plan which provides safety & security of your amount without any risk; therefore, it increases the reliability of the fund. The scheme is quite flexible and provides multiple options to invest in.
You may invest any amount in multiples of INR 1,000 and up to INR 15 lakhs.
As compared to the product available in the bond market, this product gives you an edge when you are a senior citizen.

Also ReadSenior Citizen Savings Scheme | Interest rate | Benefits | SBI | Post Office

Best Comparison

Tenure

RBI Bonds
7 years from the date of issuance.

SCSS
5 years*
*After maturity, the account can be extended for further 3 years within one year of the maturity by giving application in prescribed format.
In such cases, account can be closed at any time after expiry of one year of extension without any deduction.

PMVVY
10 years*
*PMVVY is a 10-year pension scheme with an option to take a regular income on a monthly, quarterly, half-yearly, or on annual basis.

Senior Citizens’ FD Scheme
5 Year
Minimum and maximum investment

RBI Bonds
Minimum investment is Rs.1,000 & there is no Maximum limit

SCSS
There shall be only one deposit in the account in multiple of INR.1000/-
Maximum not exceeding INR 15 lakh.

PMVVY
#Mode of Pension: Yearly
Minimum investment (Purchase Price) : Rs 1,56,658
Maximum investment : Rs 14,49,086
#Mode of Pension: Half-yearly
Minimum investment : Rs 1,59,574
Maximum investment : Rs 14,76,064
#Mode of Pension: Quarterly
Minimum investment : Rs 1,61,074
Maximum investment : Rs 14,89,933
#Mode of Pension: Monthly
Minimum investment : Rs 1,62,162
Maximum investment : Rs 15,00,000

Senior Citizens’ FD Scheme
Tax saving fixed deposits can be opened with a minimum deposit amount which varies from bank to bank (100 to 1000).
The maximum amount is fixed which is Rs. 1.5 lakh in a financial year.
Interest rates

RBI Bonds
The interest of the RBI bond would be reset half yearly starting with Jan 1st, 2021 and thereafter every July 1st and Jan 1st.
The interest rate for first interest period, payable on January 1, 2021 is fixed at 7.15%.
Note-
Base Rate – The coupon rate will be linked/pegged with prevailing National Saving Certificate (NSC) rate with a spread of (+) 35 bps over the respective NSC rate.

SCSS
From 01.10.2020
7.4 % per annum.
The interest will be revised on quarterly basis

PMVVY
the government has declared the interest rate of 7.4 per cent payable monthly i.e. 7.66 per cent per annum for the entire duration of ten years.
The interest will be revised on yearly basis.

Senior Citizens’ FD Scheme
Depending on bank.
5.40% p.a. to 7.35% p.a.
Interest rates are locked for duration of investment and are not subject to volatility.
Frequency of interest rate payment

RBI Bonds
The interest on the bonds will be payable at half yearly intervals on Jan 1st and July 1st every year.
There is no option to pay interest on cumulative basis.

SCSS
Quarterly interest shall be payable on 1st working day of April, July, October and January.
if you invested in SCSS now, then the same interest rate will be applicable for you throughout the end.
Even though the interest rate on SCSS change on quarterly basis respectively.
it's for NEW INVESTORS but not for the existing investors.

PMVVY
PMVVY it is monthly, quarterly, half-yearly, or yearly.
if you invested in PMVVY now, then the same interest rate will be applicable for you throughout the end. Even though the interest rate on PMVVY change on a yearly basis respectively.
it's for NEW INVESTORS but not for the existing investors.

Senior Citizens’ FD Scheme
The interest payable on the investment is either on a monthly basis or quarterly basis, this interest may be reinvested.
Minimum Age

RBI Bonds
Pan Card holder

SCSS
60 years and above*
*An individual of the age of 55 years or more but less than 60 years who has retired on superannuation or under VRS can also open account subject to the condition that the account is opened within one month of receipt of retirement benefits and amount should not exceed the amount of retirement benefits.
*Retired defence personnel with a minimum age of 50 years.

PMVVY
60 years

Senior Citizens’ FD Scheme
60 years
Premature withdrawal

RBI Bonds
Available*
*Premature redemption shall be allowed for specified categories of senior citizens.
Facility is available to the eligible investors after Lock in period of 4, 5,
and 6 years in the age bracket of 80 years and above, between 70 to
80 years and 60 to 70 years respectively.

SCSS
Available*
*– If closed before 1 year , no interest will be payable, if paid already will be recovered.
– after one year on deduction of an amount equal to 1.5% of the deposit to be deducted.
– after 2 years 1% of the deposit to be deducted.

PMVVY
Available*
*The premature exit is allowed only if the pensioner needs money for the treatment of any terminal/critical illness of self or spouse. In case of such surrender, there will be a premature exit penalty of 2%. You will get back 98% of the purchase price.

Senior Citizens’ FD Scheme
Unavailable*
*Premature cancellation/ part withdrawal before the lock of period 5 years is not allowed.
However, in case of death of the depositor before the maturity of term deposit, levy of penalty would be exempted and nominee/legal heir will be allowed premature payment even before the lock-in-period as per rules.
Loan facility

RBI Bonds
Not applicable

SCSS
Not applicable

PMVVY
Available*
*You can avail the loan facility after completion of 3 policy years.
The maximum loan payable will be 75% of the purchase price. Interest on the loan will be recovered from the pension amount

Senior Citizens’ FD Scheme
Not applicable
Tax Benefits

RBI Bonds
Not applicable
Interest on the Bonds will be taxable under the Income Tax Act, 1961.

SCSS
Available*
*Tax benefits of up to Rs.1,50,000 under Sec.80C.
Interest on the SCSS will be taxable under the Income Tax Act, 1961

PMVVY
Not applicable
Interest on the PMVVY will be taxable under the Income Tax Act, 1961.

Senior Citizens’ FD Scheme
Available*
*Tax benefits of up to Rs.1,50,000 under Sec.80C.
Interest on the FD will be taxable under the Income Tax Act, 1961
TDS Facility

RBI Bonds
TDS will be applicable on the interest income.

SCSS
There is a tax deducted at source (TDS) on the interest payment if the amount is more than Rs 10,000 per annum as per current tax laws

PMVVY
TDS is not deducted from the interest amount

Senior Citizens’ FD Scheme
TDS will be applicable on the interest income.
How to buy

RBI Bonds
Online or Offline.
Bonds can be bought from public sector banks & Select private sector banks like HDFC Bank, ICICI Bank etc.

SCSS
Offline process (Post office/SBI Bank/HDFC Bank/ICICI Bank).

PMVVY
LIC as it is the only institution allowed by the government to offer the plan, both online and offline.

Senior Citizens’ FD Scheme
Online or Offline.
Nomination Facility

RBI Bonds
Yes

SCSS
Yes

PMVVY
Yes

Senior Citizens’ FD Scheme
Yes

Source – LIC

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