Senior citizen savings schemes was launched by the Indian Government with assistance from the country’s leading financial institutions and NBFCs. Such savings schemes serve as an additional income source post retirement and help stay financially prepare to tackle unforeseen medical and personal emergencies in old age. They also instil a habit of saving on a regular basis.
These savings schemes offer security and safety of your invested capital as they are mostly backed by government or credit bodies like CRISIL and ICRA. Some of the top savings schemes in India for Financial Year 2019-20 are:
- Fixed deposit
Investing in a Fixed Deposit from companies like Bajaj Finance allows you to avail interest rate of up to 8.35%. Plus, Bajaj Finance FD provides an additional return of 0.35% over the standard FD rate. It paves the way for one of the best investment avenues for senior citizens to invest life’s savings and enjoy the benefit of safe and assured returns.
Furthermore, senior citizens also have the option to choose between periodic payouts to fund their necessary expenses. You can invest in a combination of cumulative and non-cumulative senior citizen FD to accumulate a corpus for future use or create a channel for steady income. This way, you can earn higher returns with the Bajaj Finance Fixed Deposit, ladder your investments with time and earn better returns.
Bajaj Finance FD also carries a tax deduction for investments up to Rs. 1.5 Lakh p.a. under Section 80C of the Income Tax Act. For instance, if one invests Rs. 1 Lakh in this FD scheme, and he/she is in the 10% tax slab – he/she will save Rs. 10,000 as tax exemptions.
- PPF (Public Provident Fund)
Apart from fixed deposits, PPF is one of the safest investment options for senior citizens. It also offer tax benefits, allowing your income earned from taxes exempt from TDS. Thus, any contributions made towards the PPF scheme as well as the interest generated from the investments are also tax deductible under Section 80C.
You can opt for this scheme from the country’s leading financial institutions and post offices, for a maximum duration of 15 years. Although you are allowed to increase the scheme’s duration by another 5 years, once the sum invested attains its maturity. Here, the rate of interest is only compounded on a yearly basis, unlike a senior FD. In case of an FD, the interest rates are compounded quarterly, biannually or annually. This is how fixed deposits bring more to table than you imagined.
- SCSS (Senior Citizen Savings Scheme)
Launched to help senior citizens of India, SCSS offers a steady channel for income with minimal risks. The duration of Senior Citizen Savings Scheme is 5 years, and the rate of interest is 8.7% per annum.
The investment ranges from Rs. 1000 to Rs. 15 Lakh from financial institutions or post office. Investments under SCSS are also tax deductible under Section 80C of the Income Tax Act. However, a drawback of SCSS is that you cannot draw a loan against the accumulated corpus as in case of Bajaj Finance FD.
- Atal Pension Yojana
The principal aim of the APY scheme is to benefit individuals employed in the unorganised sector by providing financial assistance from the Indian Government. Those individuals who are not entitled to pension benefits post-retirement can pay a negligible premium towards the APY scheme. This fund will be disbursed as a pension after they retire.
The pension amount depends on the amount of your contribution towards the scheme. However, the beneficiaries of APY scheme are not permitted to get assistance from any other savings scheme like a senior citizen FD. Besides, the pension payment under Atal Pension Yojana is taxable.
Each of these schemes comes with their set of advantages and drawbacks. But, considering the benefits offered by various savings schemes for senior citizens – it is advisable to go for fixed deposit. This is because, with a, you can not only maximise your retirement savings but also enjoy other benefits like – obtain fixed returns against market-related risks and even receive guaranteed returns in times of economic turbulence.