Retired individuals need a steady income stream, as well as some other investors are searching for investments that are not only secure, but also provide monthly, quarterly or half-yearly interest income, probably. Considering this concern we have picked 3 best investment options for senior citizens which are not only safe and secure but also provide them assured returns and these are Senior Citizen Savings Scheme (SCSS), Pradhan Mantri Vaya Vandana Yojana (PMVVY) and Post Office Monthly Income Scheme (MIS). As most leading banks provide low returns and also do not allow post office time deposits as they only provide annual interest payouts, we have not addressed bank FDs.
Pradhan Mantri Vaya Vandana Yojana (PMVVY)
The Pradhan Mantri Vaya Vandana Yojana (PMVVY) was recently updated and prolonged by the government until March 2023 for a further three financial years. The government has announced an interest rate of 7.4 per cent payable monthly in the adjusted PMVVY for deposits made in FY 20-21 until 31 March 2021. PMVVY is open only to individuals who are over 60 years of age. PMVVY is a pension plan for senior citizens with assured returns for a term of 10 years on a monthly, quarterly, semi-annual or annual basis. One has to contact LIC to invest in PMVVY, as it is the only approved establishment to offer this investment scheme. The overall contribution that can be rendered in PMVVY is limited to Rs 15 lakh per senior citizen and Rs 9,250 per senior citizen is the maximum monthly pension in PMVVY. The overall monthly pension can be Rs 18,500 in the family on an investment of Rs 30 lakh if both spouses are more than the age of 60 years of age. The pension benefit under PMVVY is not contingent on the investor's age.
Senior Citizen Savings Scheme (SCSS)
The assured return is for 5 years in the SCSS. SCSS can nevertheless be extended for 3 years but the prevailing interest rate will apply after completion of the maturity period. The interest rate on SCSS presently stands at 7.4 per cent per annum and is paid on a quarterly basis. Under section 80C, the contribution comes with tax benefits. SCSS can only be deposited by people above the age of 60 and the maximum deposit amount is capped at Rs 15 lakh under SCSS.
Post office monthly income scheme (POMIS)
The monthly income scheme of the post office is for a term of 5 years. Presently, the interest rate on the monthly income plan of the Post Office is 6.6 per cent which is paid on a monthly basis as the name suggests. The overall contribution in the Post Office monthly income scheme for a single account holder is Rs 4.5 lakh, whereas for a joint account holder the same is capped at Rs 9 lakh respectively. However, no tax benefits are provided to the investors under the Post office monthly income scheme.
As they are managed by the government, all three investment vehicles are highly secure and generate assured returns too. In the individual's hands, the interest income received from PMVVY, PO MIS and SCSS is fully taxable. After taking into consideration the regular income requirement, taxation and liquidity, a senior citizen may opt to diversify through these investments instead of investing only in one scheme or any other investment options for the higher returns.