Life after retirement in India starts at the age of 60. There are people who are risk averse just as there are people who don’t mind putting out their arms to get more than the risk taker can get and don’t mind getting hit, that is, taking a loss as a result of force- pony. on their journey.
For the second category, investing in shares in the market either directly or through the protection of stocks can be the gravitas. In this article, we are only talking about the first category – where the security of investment and constant returns are more important than anything else.
Pradhan Mantri Vaya Vandana Yojana (PMVVY)
The plan is a serious long-term plan – 10 years. The investment is a one-time advance which is selected at ₹ 15 lakh as per the budget of the senior citizens. The minimum is the amount that can generate at least ₹1,000 per month as pension. For those who have reached the age of 60 again with the post office senior scheme. It is only open until March 31, 2023. Therefore, a person must hurry if he is already 60 years old but if he does not get the status of a holy elder by March 31, 2023, this scheme will pass him even if it is possible. this scheme may expand.
One can opt for monthly, semi-annual or annual pension. On death and survival to maturity, the principal amount will be refunded. Considering that the interest rate is 7.40% per annum and also the early investment, it is clear that this scheme is a fixed deposit and hence the indication of withdrawal does not seem appropriate. milk.
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The scheme allows for early exit during the policy period under exceptional circumstances such as retirement requiring funds for treatment of critical/terminal illness of self or spouse. The surrender charge payable in such cases is 98% of the purchase price. There is also a loan after the third anniversary of the policy for a maximum of 75% of the purchase price with a specified interest rate of course double the rate of pension.
Post Office SCSS
This is the scheme which has the highest memory for the government of India. Starting from October 2022, the interest rate increased to 7.60% from 7.40% cut by corona to warm the heart of the elderly. On the other hand, it matures after five years although it can be extended for another three years.
In this regard, the PMVVY scores points in the Senior Citizens’ Budget (SCSS) while investing and forgetting for 10 years instead of having to upgrade and complete the fast-track renewal process of the day. But it does not provide latitude for early withdrawal for essentials, including emergency treatment and charges a steep price for early withdrawal – first year interest waiver if the policy is closed. account before one year, withdrawal of 1.5% of the deposit if closed during the second. years and 1% of the deposit if withdrawn during the 3rd, 4th or 5th year.
The lock-in period for the duration of three years is only one year. The amount deposited in SCSS is deductible under section 80C of the Income Tax Act but the interest is taxable.
National Pension System (NPS)
Unlike SCSS and PMVVY, entry into NPS is not the age of 60. In that sense, it is a real nest egg scheme as you start building your body for life after. You retire at the beginning of the day.
Originally, it was considered a substitute for attention defined benefit scheme of getting government employees because those who entered the civil service before 2004 got a generous pension often more than their final pay (a joint secretary of the GOI who got ₹8,000 in 1990 for his last salary draws a pension which is confusing. and ₹1.50 lakh now), the NPS is a defined contribution plan where one has to make monthly contribution to pension corpus or egg to get good money after retirement 40% of which has to be converted into annuity. The scheme was extended to those interested in 2009.
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But in April 2021, the Pension Regulatory and Development Regulatory Authority (PFRDA) has stopped the exercise of mandatory conversion of at least 40% corpus for pension and allowed full withdrawal if the corpus reaches ₹ 5 lakh and allowed systematic withdrawal for pension. amount above ₹5 lakh.
Open access to the managers of the pension fund is the most lacking in the role of investment for the elderly. The short term pension fund managers have exceeded the statutory interest rate of 8% to 9% by the Employees’ Provident Fund Organization (EPFO) has proved to be no meaningful if not misleading.
ICICI Prudential Guaranteed Pension Plan Flexi (ICICI for short)
Respecting the fact that humans as humans do not like to fit themselves into a mold but want to create refreshingly unique designs as opposed to one-size-fits-all. , the ICICI plan provides flexibility of regular savings for life guaranteed. income, the ability to choose when you want to pay, the ability to choose when you start your salary/income and the ability to choose to receive monthly, quarterly payments , semi-annually or annually. It offers a decent yield of 7.59% per annum making it a rival to SCSS with Post Office offering 7.60% per annum, but they have both LIC and Post Office benefits but have a government guarantee.
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In conclusion, it can be said without fear of contradiction that in India, one has to live in the autumn of his life unless he is lucky enough to join the government before 2004 and enjoy a pension that dares to compete with the average salary. – private sector workers.
SCSS and PMVVY caps of ₹15 lakh are too conservative. In the United States, citizens have the option of returning their property in exchange for an annuity or a one-time payment without having to replace a lifetime mortgage with such obligations silently transferred to the defaulting children. dissolve.
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In India, reverse lending has not slowed down much because of the sentiments of parents who cannot hurt their children even after death. In this event, SCSS gets instant awareness among elders despite the cap of ₹15 lakh and a very short tenure of eight years.
(The author is a CA by qualification, and writes on business, consumer issues and financial law.)