PMVVY or SCSS: Which is better for senior citizens  |  Photo Credit: PTI
Amid falling interest rates, senior citizens rely on fixed deposit products owing to the protection offered by on the lookout for better risk-free investment options. Investment experts say Senior Citizen Saving Scheme (SCSS) are good at providing assured investment return but if the aim is to seek regular income then Pradhan Mantri Vaya Vandana Yojana (PMVVY) can be contemplated.
PMVVY is a retirement-cum-pension plan operated and managed by the Life Insurance Corporation (LIC) launched by the government in 2017. The scheme assures a guaranteed return on the investment amount. The only eligibility criteria for the scheme is that the investor should be a senior citizen aged 60 or above and an Indian citizen. The minimum investment amount is 1.5 lakh which offers a monthly pension of Rs 1,000.
SCSS is open for senior citizens aged above 60 years and above and provides the safety net of government. An account under SCSS can be opened in the post office. Senior citizens can invest a lump sum amount under the scheme and get a regular income.
Both the scheme give an annual return of 7.4% but in the case of SCSS, the interest rate may vary on a quarterly basis. The interest rate will remain for the entire investment period in the case of PMVVY. At this juncture, PMVVY looks more attractive given that the government is expected to further cut internet rates of small savings scheme. At the beginning of the first quarter of the financial year 2021, Finance Minister Nirmala Sitharaman announced lowering interest rates of small savings scheme. However, the decision was rolled back within 12 hours of being announced after a huge controversy broke out.
The annual return of PMVVY is locked at the interest rate which is given at the time of investment making it imminent to quarterly changes in the interest rates on the rest of the schemes.
The lock-in period of SCSS is five years while it is 10 years in the case of PMVVY. According to the LIC website, which provides PMVVY, the interest rate on the scheme till March 31, 2022, is 7.4 per cent.
However, SCSS is better in terms of liquidity owing to a lower maturity period. Also, money can be withdrawn prematurely from SCSS account by paying a penalty.