When banks started to reduce interest on fixed deposits , the senior citizens who were dependent on bank deposits, faced a reduction in their monthly cash flow. The real interest rate started to reduce, After December 2019,
the real interest rate began to reduce and thus for maintaining the steady cash flow, retirees were expected to diversify their whole investment across various instruments.
The Pradhan Mantri Vaya Vandana Yojana (PMVVY) is a guaranteed pension scheme with death benefits for senior citizens aged 60 years. This offer is given by Life Insurance Corporation of India, which is a 10-year scheme. If death happens between these 10 years, the company is bound to pay the full amount to the beneficiary. If the pensioner survives to the stipulated date, the purchase price will be refunded to the pensioner.
This scheme offers a premature exit system where the pensioner can exit from this scheme for any critical treatment purpose or extreme illness of the pensioner or spouse. If the pensioner made a pre-mature exit, 98 percent of the purchase price will be refunded . The company will make all the payments during the policy period of 10 years,and as per the frequency of monthly, quarterly, half-yearly or yearly, whichever scheme is chosen by the pensioner according to their need.
Like all insurance policies, PMVVY also has a free-look period which exists for 15 days, starting from the date of receipt of the policy document. If the pensioner does not get satisfied with the company’s terms and conditions, he or she can exit from this policy, and when they exit, the firm is bound to return the amount paid, after deducting the charges for stamp duty and pension paid, if any. The pensioner should submit a life certificate in the form of hard copy or on online Jeevan Pramaan of LIC at fixed time intervals and the pension payments will then be released.
The Indian government introduced the Senior Citizen Savings Scheme (SCSS), and this account can be opened from any authorized bank or post office branch. For July- September quarter, a 5-year SCSS is being offered at an interest rate of 7.4%. While the rates are re-framed every quarter, once the investment is made, the rate remains fixed for the entire period. The minimum and maximum amount of investment is Rs 1,000 and Rs 15 lakh respectively. Interest payments should be made at every quarter. So, an investment of Rs 15 lakh will fetch a quarterly payout of Rs 27,750.
