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5 Pension And Investment Schemes For Senior Citizens Backed By Government

Pension plans allow subscribers to make small monthly contributions towards a retirement fund and earn monthly pensions post-retirement.

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Outlook Money
December 20, 2023
Pension And Investment Schemes

Pension And Investment Schemes

The Indian government provides pension plans for people working in organized and unorganized sectors and those self-employed for financial security in old age. Some pension plans allow subscribers to make investment decisions, while others work in an auto mode or are managed by fund managers, requiring the subscriber’s minimal involvement. These plans offer financial security in old age. Here are 5 Government Pension & Investment Schemes.

National Pension System

National Pension System (NPS) is a government-backed savings plan for retirement. It is administered by the Pension Fund Regulatory Development Authority (PFRDA). Everyone can participate in the scheme, from public to private sectors and organized and unorganized sectors to self-employed. Individuals aged 18-60 are eligible to open an NPS account, and they can make contributions of 10 percent of their monthly salary to the corpus till the retirement age of 60. The NPS member can withdraw 60 percent of the corpus at retirement in a lump sum, and the remaining 40 percent must be reinvested in a pension plan, providing seniors with regular cash flows.

Varishtha Pension Bima Yojana (VPBY)

Varishtha Pension Bima Yojana (VPBY) is a central government-backed scheme, administered by the Life Insurance Corporation of India (LIC). Those aged 60 and older are eligible for the scheme. However, there is no maximum age limit. VPBY pensions kick off after a month of purchasing the policy through NEFT or ECS. The pension continues till the subscriber’s death.

Atal Pension Yojana

Atal Pension Yojana is a government initiative focusing on laborers and wage workers. The APY scheme encourages small savings for retirement as part of a social security initiative. It allows them to make a monthly contribution from their salary, besides the scheme’s contribution of up to Rs 1,000 towards the corpus. After retirement, the subscriber can get a pension of Rs. 1,000 to Rs. 5,000 based on their monthly contributions. If the subscriber dies, the nominee receives the accumulated fund. It is one of the most know schemes from the 5 Government Pension & Investment Schemes.

Provident Funds

Employees’ Provident Fund (EPF) is for the organized sector workers, whereas the Public Provident Fund (PPF) is for all. It is a savings and investment tool for retirement. In EPF, the employer matches the employee’s contributions; the accumulated funds are then invested in low-risk instruments for safe returns. Anyone can open a PPF account, including minors, provided it is under the guardianship of a parent. EPF allows contributions of 10-12 percent of the employee’s monthly salary, whereas PPF’s minimum monthly contribution is Rs. 500 with a ceiling of Rs 1.5 lakh in a financial year.

Senior Citizens Savings Scheme

SCSS is a government-aided scheme for individuals aged 60 and older. This scheme offers higher interest rates at 8.20 percent per annum. In this scheme, investments are allowed individually or jointly with a minimum of Rs. 1,000 up to a maximum of Rs 30 lakh. It has a five-year lock-in but allows premature withdrawals, subject to conditions. The interest is paid quarterly based on the invested amount. SCSS provides regular cash flows for seniors.

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