Best Senior Citizen Saving Schemes in 2022

Retirement is a seemingly scary concept but doesn’t necessarily mean the end of the line. Some take this time to travel the world, some see it as a welcome opportunity to spend time with their loved ones, and finally, some find this victory stage another chapter of their entrepreneurial lifestyle. All of these options have one thing in common, the need for financial planning and smart schemes that provide constant income and security. We at Emoha take your well being and financial independence as senior citizens very seriously, follow on as we attempt to provide you with all available senior citizen saving schemes, SCSS interest rates and more such information that will help you gain financial security for your future. 

Our country has always looked after the interests of our seniors and has equipped us with an arsenal of investment options that one can choose from, this article will help you with all the guidelines that each senior citizen saving scheme listed below brings to you so that you can choose the best-suited one for yourself. 

Here are 4 Must-Have Indian Senior Citizen Saving & Investment Schemes in 2022

Senior Citizen Savings Scheme (SCSS)  

Some of the things that retirees look for in a scheme are – the safety of invested money, regular income, and a trusted source offering guaranteed returns. The Senior Citizen Savings Scheme right here ticks all the boxes as this is backed by our government since 2004. A widely trusted option by retirees over the years and for many to come.   

To be eligible to avail of this scheme, one must be a senior of age 60 or above. However, this scheme is not limited to this age group only, you can also apply for this scheme if you have opted for the Voluntary Retirement Scheme between 55 – 60 years or retired as defence personnel aged anywhere between 50 – 60 years. Please note that you cannot apply for this scheme if you come under the Hindu Undivided Family (HUF) and Non-resident Indians (NRI) categories. 

You can invest anywhere from a minimum of 1000 INR to a maximum of 15 lakh INR through this scheme. There are many ways you can invest in the SCSS, namely as lumpsum, individual or joint investment, however, keep in mind that this investment cannot exceed 15 lakh INR.    

Currently, an ROI (rate of interest) of 7.4% is offered on the investment for this scheme. Please note that these ROIs change every quarter of the year as the interest payout happens quarterly, but you don’t need to worry as you get the ROI of what you started the investment with. 

The tenure term for the SCSS is up to 5 years, when this term is over you can either start withdrawing your investment and returns, or you can extend this term for 3 more years. This option can only be used once, and if exhausted one now has to withdraw their total returns. 

The option of withdrawing your money early is always there, but it comes at the cost of a small penalty, depending upon how before the 5-year mark you withdraw. The penalty, however, does not apply to the individuals who are withdrawing after opting for the 3-year extension. You can withdraw your money anytime during those 3 years. 

The SCSS comes under the ETT (exempt-taxed-taxed) category, implying that while your invested amount is exempted from being taxed, your interest income will be taxed under your income-tax slab and the maturity amount gets taxed as per section 80C. Additionally, the TDS (Tax Deducted at Source) applies if your income of interest goes over 50,000 INR within a financial year. 

 2. Pradhan Mantri Vaya Vandana Yojana (PMVVY)  

Life Insurance Corporation (LIC) is a name widely trusted by seniors in India. In 2017, LIC started managing and operating the well-known Pradhan Mantri Vaya Vandana Yojana (PMVVY), an annuity plan schemed as a lump sum retirement and pension plan. 

Originally it was offered from May 2017 to March 2020 and is now extended till March 2023 due to its popularity and people’s faith. 

PMVVY is strictly reserved for senior citizens of India who are in the 60s and above age range. This range isn’t capped by other restrictions currently, so any Indian citizens in this age gap can avail of this opportunity. However, this scheme can’t be opted for by Non-Resident Indians. 

Originally planned with an ROI of 8 – 8.3% yearly, it has now been revised to be specifically based on each investor’s chosen pay-out. Different ROIs for each period of pay-out have been charted out on per month, per quarter, half-yearly and yearly basis. Previously, standing at an ROI of 7.4% for 2020-21, this will be re-analysed soon for the coming year. 

The minimum investment in this scheme is set quite high at 1.5 Lakh INR and, as seen previously, the maximum set amount for investment was capped at 7.5 Lakh INR but is now changed to 15 Lakh INR. 

Once you avail of the Pradhan Mantri Vaya Vandana Yojana, you are locked in for 10 years. Your pay-out methods, as previously discussed, can be on a monthly, quarterly, half-yearly, and yearly basis. The pension amount through this scheme is fixed regardless of your age. 

Furthermore, you have the option of loaning 75% of the investment amount after you have completed at least 3 years under this scheme.   

Early withdrawal is an option, however, not a recommended one. They allow you to withdraw prematurely in case of a terminal illness of your own or your partner’s, but you will have to surrender 98% of your initial investment amount.  

The tax implications of this scheme are quite similar to SCSS, however, you do not have to pay the GST amount on any of your purchases. 

3. Post Office Monthly Income Scheme (POMIS)  

The POMIS is a low-risk income scheme under the purview of the Finance Ministry of India. This is a monthly pay-out scheme that is low-risk and offers safeguards and capital protection. It is considered helpful during the early years of your retirement. 

This scheme sets itself apart by not limiting itself to investments from just senior citizens, as any Indian citizen aged 10 years and above can avail of this scheme by visiting the nearest post office and submitting all the required documents. The investment can be made in cash or cheques, and your account can be transferred to a different city free of cost at any date.   

Starting at a minimum investment amount of 1500 INR, it is a cheap and secure option, catering to small rural areas of India as well. The maximum amount for a single individual is capped at 4.5 lakhs INR, and a joint account investment amount is capped at 9 lakhs INR. 

The ROI of this scheme was 6.6% for the quarter ending 30th Sept 2021, and it changes every subsequent quarter. The pay-out is every month, guaranteeing the investor a regular pension, this can be collected from your post office or directly transferred to your bank account. 

The minimum lock-in for the Post Office Monthly Income Scheme is 5 years, and you can reinvest after 5 years to avail of double benefits. Early withdrawal of investment for this scheme can be availed after 1 year. If you want to withdraw after 1 year but before 3 years you are penalised for 2% of the invested amount, and if you withdraw in the period of 3 to 5 years the penalty amount is 1% of the invested amount. 

The returns from POMIS are not considered as tax deducted at the source, as you will be taxed under your income-tax slab anyways. Similar to SCSS and PMVVY, this scheme comes under the ETT category, but the 5-year investment does not come under the section 80C category. 

 4. Senior Citizen Fixed Deposits  

This is one of the more recent investment options for Indian senior citizens. It started in May 2020 due to the financial problems caused by the COVID-19 pandemic. This scheme was created keeping in mind that seniors need to have a better and more regular source of income for retirees above the age of 60 years.

Fixed deposits in this scheme are quite flexible as this scheme is available not just for all Indian citizens over 60 years of age, but also for NRIs. NRIs can open their fixed deposits with the help of their NRE and NRO accounts. Some banks provide this scheme to their early retired customers over the age of 55. However, this rule does not apply to every bank and comes with unique terms and conditions.

This scheme is quite adaptable, with its minimum investment amount as low as 5,000 INR if done online and 10,000 INR if you are booking the investment at your bank. The maximum investment amount is usually capped at 2 Crore INR but can differ from bank to bank. 

The tenure for this scheme can be as low as 180 days but comes in the options of 1, 3, and 5-year periods. The pay-out comes in various options like a monthly, over a quarter of a year, over half a year, or every financial year pay-out.  

The ROI can vary from bank to bank but is usually between 6.25%-7.75% per annum. It usually depends on the scale of the bank, large banks often offer lesser ROIs than smaller scale banks. 

The premature withdrawal incurs a penalty of a mere 1% of the investment amount. 

This investment falls under the ETT category, and interest returns equalling up to 50,000 INR, annually are tax-free only for senior citizens. If opting for the 5-year lock-in option, you can save up to 1.5 Lakh INR due to Section 80C. 

Latest Update on Interest Rates for Senior Citizen Savings Scheme & Post Office Monthly Income Scheme – 31st March, 2022 

The government has retained the Interest Rates (ROIs) for small savings schemes, including the Senior Citizen Savings Scheme and the Post Office Monthly Income Scheme, for the 1st quarter (Q1) of the financial year 2022-23 (1st April, 22 to 30th June, 22). The ROI on the 5-year Senior Citizens Saving Scheme continues to remain at 7.4%. The ROI for the Post Office Monthly Income is also retained at 6.6%. These rates may change in the following quarter, watch this space to get timely latest updates on senior citizen saving schemes. 

These are some of the best investment and tax-saving senior citizen saving schemes available for all our beloved elders. We hope this helps you better prepare for your retirement as an Indian senior citizen.  

We will keep updating you on the best investment options and senior-specific government schemes for you in the future as well. Stay in touch with Emoha Blogs, to get the latest information on a range of topics from health to entertainment. Download the Emoha App here, or find it on Google Play Store and IOS App Store. 

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