Top Pension Schemes For Senior Citizens To Invest In 2024

Varishtha Pension Bima Yojana is a central-guaranteed pension scheme for elderly Indian citizens operated by the Life Insurance Corporation of India (LIC). As per the government, the VPBY scheme will provide subscribers a guaranteed rate of 9% per annum (payable monthly) on lump sum deposits.

• Account Type
  For citizens aged 60 years and above.
• Investment
  In the VPBY pension scheme, the policyholder deposits a lump-sum amount for a lock-in period of 15 years to receive the pension either monthly, quarterly, half-yearly, or yearly from the date of purchase of a policy.
• Withdrawal
  Varishtha Pension Bima Yojana funds can be withdrawn or claimed under following circumstances:
  Pensioner’s death: A nominee of the pensioner will receive the purchase price upon submission of a discharge form with an original copy of the policy document, proof of title, proof of death to the corporation within 90 days of the policyholder’s death.
  Benefit payable on surrender: The pensioner will receive 98% of the value of purchase upon premature exit after the completion of 15 years. However, during emergencies upon submission of related documents, 98% of the value of purchase can be withdrawn before 15 years.
• Return on Investment
  The scheme currently provides an assured interest of 9% per annum, the amount which is deposited monthly into the policyholders’ account. Total amount of pension under the policy should not exceed INR 60,000 per annum. The scheme allows beneficiaries with an option to opt for pension on a monthly, quarterly, half yearly and annual basis.
• Loan Benefit
  Policy allows beneficiaries to obtain 75% of purchase price as loan after the completion of three policy years from date of joining the VPBY scheme.
• Tax Benefit
  VPBY scheme subscribers can avail of income tax benefit on the purchase price under Section 80CCC of the Income Tax Act.
• How to Apply
  Application forms to open a VPBY pension scheme account can be submitted online via the official website of the LIC, or can be procured physically from the LIC branch upon submission of documents related to proof of age, proof of identification, etc.

Account Type

Employees Provident Fund (EPF) is a monetary scheme for all salaried individuals earning more than INR 10,000 per month. The scheme under the Ministry of Labour and Employment provides an assured interest of 8.25% per annum.

Investment

In EPF, a share of the amount is contributed by the employer as well as an employee on a monthly basis. Employees contribute 12% (or, INR 1800 fixed amount) and the employer will match and deposit 12% from their end.

Related: How to calculate the PF balance

Withdrawal Options

The EPFO has laid down rules for insured members to withdraw the PF balance, either in advance or full settlement. Here are the following scenarios for withdrawal:

• Insured members can withdraw up to INR 1 lakh of their PF money in case of emergencies.
• Full PF amount can be withdrawn once you attain 55 years of age.
• Members leaving the service before 55 years of age should file claims by the age of 58 years.
• In case of the beneficiary’s death, nominees should file a claim maximum within three years.

Tax Benefit

The principal and interest amount is free from the tax radar if an insured member’s EPF contribution is below INR 1 lakh per year. For government employees, the amount will be taxable if it exceeds INR 5 lakh.

How to Apply

Employers are authorized to open an EPF account on behalf of their employees. A universal account number (UAN) is provided by the EPFO to an employee to access their PF passbook, check PF balance, etc. One is required to maintain only one or the same UAN even after changing the company. The UAN number is usually mentioned on salary slip, or obtained from the employer.

Insured members can access EPF accounts via the online portal of the EPFO to view their passbook, financial statement that contains history of transactions and entries of amounts that are being deducted from their salary during the entirety of employment years.

The SCSS account caters to senior citizens above 60 years of age, or retired personnel between 55 to 60 years of age. It is a five-year savings plan offered by Indian post offices that gives a return at an interest rate of 8% on deposits that are made on a lump sum basis.

• Account type
  Single and joint account with spouse only.
• Investment
  The government changed the maximum deposit limit to INR 30 lakh from INR 15 lakh during the Union Budget 2023-2024. Investments on SCSS are made on a lump sum basis.
• Maturity
  Payable on a quarterly basis.
• Return on Investment
  SCSS is currently offering an interest rate of 8% per annum, and is calculated quarterly on a simple interest basis. The amount earned on the deposit is added to the beneficiary’s account.
• Withdrawal
  Draw only the interest earned on a monthly basis via auto credit into savings accounts at the post office. Or, withdraw the full amount at the time of maturity.
• Premature withdrawal
  SCSS accounts can be prematurely closed upon a penalty up to 1.5% on the principal deposit.
• Tax Benefit
  Deposit on the SCSS account is subject to tax deduction if the interest earned is below the prescribed limit of INR  50,000 in a financial year.
• How to Apply
  Visit authorized banks and post office branches.
  Submit SCSS form, documents proof of age, identification, as well as retirement.
  Citizens retired under voluntary schemes will have to produce their employment certificate.

Launched in 2017, Pradhan Mantri Vaya Vandana Yojana is aimed at providing social security to elderly Indian citizens aged 60 years and above. The pension scheme is operated by the Life Insurance Corporation of India (LIC) on behalf of the government.

• Account type
  Single and joint account with spouse only.
• Investment
  Deposit a lump sum amount to receive the pension, along with interest, either monthly, quarterly, half-yearly, or yearly for a period of 10 years from the date of purchase of a policy.
• Return on Investment
  The PMVVY scheme is currently offering an RoI of 7.40%. The return is earned on the basis of the purchase price and the payment mode of the policy bought at the time of opening an account.
  For instance, a monthly pension of INR 9,250 can be earned on a purchase price of INR 15 lakh, INR 1,11,000 per annum on the purchase price of INR 14,49,086. Likewise, INR 1,61,074 quarterly for the purchase of INR 14,89,933, and INR 1,59,574 half-yearly for the purchase of INR 14,76,064.
• Withdrawal options
  Pensioner’s death: A nominee of the pensioner will receive the fund.
  Benefit payable on surrender: The pensioner will receive 98% of the value of purchase upon premature exit, which is released for emergencies.
  Benefit payable on maturity: Full purchase price along with final pension installment to end the policy after completion of 10 years term period.
• Tax Benefit
  The interest earned on the PM Vaya Vandana Yojana is subject to income tax deductions under Section 80C of Income Tax Act, 1961.
• How to Apply
  Visit the branch office of the LIC and submit forms and documents related to proof of age, proof of identification, etc.

The Pension Fund Regulatory and Development Authority of India (PFRDA) offers the National Pension Scheme (NPS). The government-backed initiative allows you to invest across different asset classes as per your choice to build your retirement corpus.

• Account Type
  For citizens within the age group of 18 to 65 years.
• Return on Investment
  The NPS scheme offers returns based on the performance of funds since it is a market-based product. Remember, NPS has two account options, as follows:
• Tier I NPS Account: The minimum contribution is INR 500, and there is no upper investment limit. The fund has a lock-in period till the time depositors turn 60. Up to 60% of the deposit can be withdrawn, and the remaining 40% of the corpus has to be invested to buy an annuity plan from the insurance company to receive a monthly pension.
• Tier II NPS Account: Tier II account is a voluntary account that can be opened by individuals who already have a Tier I account, paying a minimum deposit of INR 1,000.
• Tax benefit
  Tax benefits on NPS account are applied on different scenarios, as follows:
• On early exit: Premature exit from NPS has withdrawal option up to 25% of the corpus, the amount which is exempted from tax.
• Lump sum withdrawal at retirement: The 60% of the corpus amount withdrawn after attaining 60 years is exempted from tax.
• Purchase annuity: The remaining 40% invested in annuity plan is also exempted from tax.
• Withdrawal due to death: The amount payable to the nominee fully exempted from tax.
• How to apply
  NPS accounts can be opened online via the official website of eNPS. The registration process is self-explanatory upon submission of Aadhaar or PAN card details via one-time password verification, along with an initial payment of minimum INR 500. A 12-digit permanent retirement account number (PRAN) is then generated along with the password to log into the account.

The Government of India launched Atal Pension Yojana (formerly, Swavalamban Yojana) in June 2015 under the Pension Fund Regulatory and Development Authority (PFRDA) for 18-40 years age group, especially for those working in an unorganized sector to help them build retirement funds once they turn 60 years old.

• Account Type
  18-40 years age group citizens whose income does not fall under the existing tax slab, or receives benefits under any statutory social security scheme.
• Return on Investment
  The pension amount beneficiaries receive depends as per their age at which the individual has joined APY and their monthly contribution amount for a period of 20. The contribution amount goes up with an increase in age.
  The amount varies as per subscribers’ choice of receiving pension amount either INR 1000, INR 2000, INR 3000, INR 4000 or INR 5000 rupees slabs. The pension amount can be upgraded or downgraded once in a financial year. Let’s understand this with an example:
  If you decide to enter into the APY scheme at the age of 34 to receive a monthly pension of INR 5,000, you will have to deposit INR 824 per month for 20 years to start receiving the pension when you turn 60 years. This amount would be INR 210 for individuals entering into the scheme at the age of 18 years old.
• Exit facilities
  Voluntary exit: The scheme allows individuals to exit before 60 years of age after submission of account closure form (voluntary). It should be noted that subscribers should not close the savings bank account linked with the APY account as this may create problems in transfer of closure proceeds.
  Exit due to death: The nominee of the beneficiary has to submit an APY closure form (death), along with a copy of the death certificate to the concerned branch office. If the account holder dies before 60 years, the spouse has the option to continue the contribution for the remaining vesting time.
  In case the spouse does not wish to continue, the pension contributions as well as the interest earned will be refunded after deducting the account maintenance charges. On death of the APY account subscriber after 60 years, the pension is paid to the spouse, or to the nominee of the subscriber.
• How to apply
  Individuals in the 18 to 40 years age group can obtain the APY application form from any scheduled banks and post office and submit it along with documentary proof, such as ration card, Aadhar card, PAN card, BPL card, and bank statement. Contributors will receive their permanent retirement account number (PRAN) card, which can also be downloaded from APY mobile application. This mobile app also allows subscribers to check the last five contributions, transaction statements, etc.

Account Type

The Central Government provides full support to states and union territories of the country to extend the Indian Indira Gandhi National Old Age Pension Scheme (IGNOAPS) for senior citizens under the below poverty line (BPL) category. As per the National Social Assistance Programme (NSAP), under the Ministry of Rural Development, INR 19.41 crore was distributed to 1.48 crore (Aadhar) beneficiaries in the year 2021-22.

Eligibility and Point of Contact

The Sub-Collector sanctions pensions in favor of the beneficiaries on the recommendation of the block development office (BDO), the amount which varies among states. In states like Odisha, INR 300 is distributed every month in cash to beneficiaries who are above 60 years of age and INR 500 for super senior citizens above 80 years. Whereas in Maharashtra, BPL citizens above 65 years receive INR 600 per month,

INR 200 from Govt. of India & Rs.400/- from Govt. of Maharashtra under Shravan Bal Seva Rajya Nivrutti vetan Yojana. In all the beneficiary receives Rs. 600/- per month.

Documents for IGNOAPS

Collect the application form from the BDO’s office. Along with the form, applicant will have to submit documents including:

• BPL card
• Ration card
• Aadhar card
• Voter’s ID
• Bank Details
• Passport-size photographs

The verification takes due process for the sanctioning authority to announce the IGNOAPS beneficiaries list in the block office and gram panchayat offices. Pensions are then credited monthly on beneficiaries’ bank or post office account, or even in cash.

Related: Post Office Savings Schemes And Interest Rates