Senior Citizens Savings Scheme 2021: Here’s All You Need to Know

Senior citizens opt for a fixed regular income without additional risk. The COVID 19 pandemic has forced to reduce interest rates and this, in turn, has affected the senior citizens. The government has introduced various measures specifically to help senior citizens. Senior citizen interest rates have been revised to help the elderly. Senior citizens are exempt from filing income tax returns if pension income and interest income from a bank is their only income. Banks are now empowered under Section 194 P to deduct tax from senior citizens above the age of 75 years with a pension and interest income. But it is imperative to note that leading banks provide a maximum interest of 6.2 percent to the senior citizens on their fixed deposits. Post office small savings schemes provide slightly better Bank fixed deposits have traditionally been a popular alternative for most senior individuals.

Bank FDs pay interest on a monthly, quarterly, half-yearly, or annual basis. Some banks, including SBI, ICICI Bank, and HDFC Bank, provide older citizens special deposits on deposits of five years or more. These special FDs are valid till June 30, 2021. The majority of Small Finance Banks are offering interest rates over 7%. But there are better options available for senior citizens to earn better returns on their hard-earned money. Let us take a look into the various senior citizens' savings schemes where they can invest their hard-earned money confidently and get a fixed monthly income. 

Senior Citizens Savings Scheme

(SCSS) is a senior citizen saving scheme of the government that pays 7.40 percent per year at the moment. This is a retirement benefits scheme where senior citizens can park their life savings with the assurance of negligible risk. SCSS has a five-year term that can be extended by three more years. The maximum amount that can be invested in SCSS is Rs. 15 lakh. SCSS is a good option for retirees who want a high fixed rate of return and a quarterly income. The investors in this scheme are eligible to claim exemption under Section 80 C the Income-tax Act, 1961 for an amount up to 150000. This is an ideal scheme to take advantage of the Senior citizen interest rates.

The Pradhan Mantri Vaya Vandana Yojana (PMVVY) is a combined retirement and pension program for old adults. Life Insurance Corporation is in charge of the scheme's operation and management. The PMVVY program has been extended through March 31, 2023. Currently, the system offers a special Senior citizen interest rate of 7.40 percent in the annually guaranteed pension that is paid monthly. The PMVVY appears to be an attractive scheme for elders. It is safer than small financing institutions because it is backed by the LIC and the government. You can also acquire guaranteed pension benefits for the next ten years without having to worry about rate changes. 

Bank fixed deposits have traditionally been a popular alternative for most senior individuals. Bank FDs pay interest on a monthly, quarterly, half-yearly, or annual basis. Some banks, including SBI, ICICI Bank, and HDFC Bank, provide older citizens special deposits on deposits of five years or more. These special FDs are valid till June 30, 2021. The majority of Small Finance Banks are offering FD Senior citizen interest rates over 7 percent for senior citizens.

The Post Office Monthly Income Scheme (POMIS) has a 5-year term and the interest rate remains constant until the maturity date. The interest rate is currently 6.6 percent per annum for the quarter ending June 2021.

Assured fixed monthly income on a lump sum principal is what the senior citizen looks forward to. Mostly the principal comprises retirement benefits which are lifetime savings. Hence such investments should be made with a lot of care. The senior Citizens savings Scheme appears to be an ideal choice for the elderly taking into consideration maximum returns coupled with the security of being a government-owned scheme.