Planning for retirement is crucial to ensure financial stability and independence in old age. The government provides various savings schemes designed to promote financial security and peace of mind during retirement. These schemes provide regular returns, tax benefits, and financial security, catering to different income levels and risk preferences. With these schemes, retirees can create a balanced financial plan that supports their lifestyle and healthcare needs.
Let’s explore the best government-backed schemes for a worry-free retirement.
Employees’ Provident Fund (EPF)
The EPF is a retirement savings scheme for salaried employees. Employees contribute 12% of their basic salary and dearness allowance, with an equal contribution from the employer. The current interest rate is 8.25%. The fund matures at 58 years of age, providing a lump sum amount with accrued interest. Partial withdrawals are allowed for emergencies. Contributions qualify for tax deduction under Section 80C of the Income Tax Act.
Also Read: Loan Options for Senior Citizens: How to secure financing in retirement
National Pension System (NPS)
The National Pension System (NPS) is a market-linked retirement scheme that allows individuals to build a corpus through diversified investments in equity, government bonds, and corporate debt. Returns vary based on market performance. Subscribers can claim tax benefits up to Rs 1.5 lakh under Section 80C and an additional Rs 50,000 under Section 80CCD(1B).
Pradhan Mantri Vaya Vandana Yojana (PMVVY)
PMVVY is a pension scheme designed for senior citizens aged 60 and above. It offers a guaranteed return of 7.4% for 10 years, providing financial security against market volatility. The maximum investment allowed is Rs 15 lakh per individual. The scheme offers a fixed monthly, quarterly, or annual pension based on the investment amount. Upon maturity, the principal is returned to the investor. In case of the investor’s death during the policy term, the purchase price is paid to the nominee.
Senior Citizens’ Savings Scheme (SCSS)
SCSS is one of the highest interest-paying schemes for senior citizens aged 60 and above. The current interest rate is 8.2%, making it an attractive option for conservative investors. The maximum investment limit is Rs 30 lakh, with a tenure of 5 years, extendable by an additional 3 years. Interest is paid quarterly, ensuring a regular income stream. Investments in SCSS qualify for tax deduction under Section 80C.
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