Personal Finance

Plan your Retirement with Govt Pension Security Plans

Plan your Retirement with Govt Pension Security Plans

Battling against inflation is proving to be a challenging task for a daily wage earner, so how come a senior citizen (retired) would be able to cope up in such an environment. Well, to address this serious issue, Modi government has presented different schemes for people falling under this age bracket. Here we have detailed about a few pension plans.

Pradhanmantri Vaya Vandana Yojana

It is an assured pension scheme (for individuals who are aged 60 years and above to meet their income needs) launched by LIC on May 4, 2017, which will be valid for a year. Here’s a sneak peek about the same:-.

This pension scheme is available on the monthly, quarterly and yearly basis. It has a fixed and assured pension as mentioned in the policy document till the maturity of the scheme. Unlike other pension plans like Jeevan Akshay, the amount of pension is not dependent upon the age. The return may vary from 8 to 8.3% depending upon the mode of pension scheme that an individual chooses.

How much many can a person invest in it? The total amount of the pension under this policy should not exceed beyond 60,000 per annum or Rs 7.5 lakh for a family. The family includes the pensioner, spouse or any other dependents.

Calculation-Suppose, if you want a pension of Rs 3000 to meet your regular incomes needs, then you need to invest Rs 4.5 lakh. On investing the maximum capped amount 7.5 lakh an individual will get a pension of Rs 5000.

Payment- The payment will be made via NEFT or Aadhar enabled payment system. On maturity of the said term 10 years, the individual will receive the invested amount along with final pension installment. On the death of an individual, only the invested amount will be refunded to the beneficiary. In case, the investor requires money for critical illness he/she is allowed for an early exit and in that case, 98 percent of the purchase price will be refunded back.

From where to buy the policy and is it taxable– you can buy this policy from LIC of India and there is no tax benefit available for this policy.

Senior Citizen Savings Scheme offered by SBI

This scheme is for individuals who have completed 60 years or above. To avail this scheme, you can open the bank account or with a post office. Only your spouse can be made a joint account holder for this purpose.

How much money can you invest in this scheme- The maximum amount that you can invest in this scheme is Rs 15 lakh.

Tenure- The maximum time that you can invest in this scheme is for a period of five years initially and it can be extended to eight years. If due to any circumstance, you close the account in a midway an amount equal to 1.5 percent is deducted from your interest. As per this scheme, the government doesn’t allow you to withdraw the money before one year. This is a lock in period and you are not allowed to take a loan against it.

Calculation– The rate of interest under this scheme is decided to be 8.4% that will be decided by the government each year. The interest is paid to you on a quarterly basis. Similar to FD’s the interest of 10,000 and above is taxable unless you file a form 15H in case you have completed 60 years of age and 15G in case you have not completed the barred age.

Payment- The interest is payable on the quarterly basis (March 31, June 30, Sep 30 and December 31). On the death of the individual, the money is transferred to the spouse for joint account holders. In case, the money is lying in a single account the amount is payable to the legal heirs.

Apart from government banks, you can avail this scheme from ICICI bank too. There is no income tax or wealth tax rebate.

Atal Pension Yojana (started in 2015)

Atal Pension Yojana Scheme is for weaker sections of the society, who is not able to meet up their needs. To be eligible for this scheme, the subscriber must be 18 years old and maximum 40 years old.  The minimum contribution is 20 years.  You can select for a monthly pension scheme amount to Rs 1000, Rs 2000, Rs 3000 and Rs 5000. In order to encourage people to be a part of the scheme the government of India plans to contribute certain amount towards the pension scheme for the period of five years i.e. 2015-2020.

 atal pension yojana

Source Mygov

These schemes are in conjunction with travel concessions offered by IRCTC for the senior citizen, and a special interest on their fixed deposits.

Conclusion

The government of India is taking several initiatives’ to raise the status of senior citizens in India. But, there is a long way to go.

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