The Prime Minister in his address to nation had promised a pension product for senior citizens which would offer 8% fixed interest for 10 years. The plan has been approved by his cabinet and is called Varishtha Pension Bima Yojana 2017. A similar Varishtha Pension Bima Yojana was launched earlier by LIC in 2014 & 2003.
The plan is yet to be launched and more details are awaited for the same. We share with you whatever details are out as of today.
Salient Features of Varishtha Pension Bima Yojana 2017:
- Minimum age for investment is 60 years
- There is NO Maximum age for entry
- Maximum Investment: Rs 7,50,000
- It gives return of 8% compounded monthly.
- You can choose to receive pension monthly, quarterly, half yearly or annually
- On death of the policy holder, the premium is returned back to the nominee
- The plan is available for only 1 year from the date of launch (which is yet to be decided).
- The interest paid would be added to the income and taxed as per income tax slab.
Comparison with earlier Varishtha Pension Bima Yojana:
Here is a comparison shared by Nagpal Manoj on twitter:
We would provide with more details as they are announced.
Investments offering more than 8% for Senior Citizens:
There are few investments which still offer more than 8% returns for senior citizens. You must look into the same before committing your funds to LIC VPBY.
1. Ratnakar Bank offers 8.2% for senior citizens for 20 years deposit.
2. NCDs/Bonds listed on Stock exchange. Some examples:
- M&M Financial Services (AAA rated) has yield of 8.52% and residual maturity of 9.37 years
- Edelweiss Housing Finance Ltd (AA+ rated) has yield of 9.71% and residual maturity of 9.49 years
- Reliance Home Finance Ltd (AA rated) has yield of 9.71% and residual maturity of 14.95 years
The problem is the liquidity for these bonds are low and hence it’s difficult to buy/sell. However you can buy easily when they are issued.
Also Read: Latest NCD open for subscription
3. Tax Free Bonds listed on Stock Exchanges
PFC, HUDCO, NABARD, IRFC etc had issued tax free bonds in the past and are available on exchanges with yields in the range of 6.25%. The bonds have residual maturity of 10 to 15 years. As the interest received is tax free, these turn out to be better investments for senior citizens in highest tax bracket. The interest payout is annual. Also all the companies are backed by Government of India and also AAA rated – hence safe for investment.
4. Senior Citizens Saving Scheme
Senior Citizens Saving Scheme offers 8.5% interest which is payable quarterly. This too is backed by Government of India and so is safe. The problem is you can lock-in your amount only for 5 years.
Also Read: All about Senior Citizens’ Savings Scheme
5. DHFL Aashray Deposit Plus
DHFL is housing finance company and is rated AAA. It offers 8.75% to senior citizens for fixed deposit up to 10 years. You can choose to get interest monthly, quarterly, half-yearly or yearly.