Pension Scheme for Senior Citizens

Types of Monthly Pension Schemes for Senior Citizens

The choice of a pension scheme depends on your savings, your requirements, and risk tolerance, among other factors. Let us have a look at the best monthly old age pension schemes depending on various factors:

• Government Pension Plans for Senior Citizens: For individuals who are averse to risk, you can look at government pension schemes that offer a monthly sum once you hit your retirement age. 

• Traditional Annuity Schemes: There are also traditional guaranteed annuity schemes that come with insurance protection.

• ULIP Retirement Plans: Those who are willing to take some risks to grow their savings can explore retirement ULIPs that offer a life cover along with market-linked investments. These plans come with monthly annuity options that go on till the death of the policyholder.  

Monthly Pension Schemes for Senior Citizens by the Government of India

Ensuring the growth, development, and financial security of senior citizens is the duty of every Government. To fulfill this responsibility, Government Ministries and their financial institutions have introduced various government-backed pension plans in India.

The following old age pension plan list will give you a better understanding of these pension schemes: 

1. National Pension Scheme

   Entry Age Criteria: A senior citizen in the age bracket of 60 to 70 years.

   Policy Term: The policy benefits can continue till they turn 75 years of age. This gives investors 5 years to invest and benefit from the returns of market-linked instruments such as equities, Corporate Bonds, Government Bonds, etc. 

   Features of the National Pension Scheme (NPS):

   • On maturity, the policyholder can withdraw 60% of the accumulated funds.

   • No upper limit on the investment amount in the pension plan.

   • It is mandatory to invest a minimum of 40% of the income to purchase an annuity plan. This is to ensure a source of monthly income for senior citizens for the entirety of their lives.

   • The NPS is one of the most effective tax-saving instruments. You can save up to Rs. 1.5 lakhs in taxes under section 80C and up to Rs. 50,000 under section 80CCD (1B) of the Income Tax Act of India. 

2. Pradhan Mantri Vaya Vandana Yojana (PMVVY)

   Entry Age Criteria: Any person aged 60 or above can purchase this pension scheme. 

   Policy Term: This monthly pension scheme for senior citizens comes with a fixed policy term of 10 years. 

   Maximum Investment Limits: Rs. 1.62 Lakhs to Rs. 15 Lakhs. For a monthly pension, the minimum amount that you would have to invest is Rs. 1.62 Lakhs. The maximum purchase price is capped at Rs. 15 Lakhs. 

   Features of PM Vaya Vandana Yojana (PMVVY): 

   • Investment can be made monthly, quarterly, half-yearly, or yearly. 

   • The corresponding minimum and maximum amount of pension you would be entitled to monthly are Rs. 1000 and Rs. 9250, respectively.

   • The policyholder also enjoys life coverage throughout the entire duration of the policy term.

   • The nominees shall be offered the purchase price in full in the event of the pensioner’s death.

3. Indira Gandhi National Old Age Pension Scheme (IGNOAPS)

   Entry Age Criteria: Anyone aged 60 and above and falling in the BPL category. One can benefit from the monthly payout made by the Central Government to the beneficiaries.

   Maximum Investment Limit: This is a non-contribution pension plan, i.e., the beneficiary need not pay any premium amount.

   Features of IGNOAPS:

   • This is a monthly pension scheme for senior citizens belonging to the low-income population of the country.

   • The Government of India funds this pension scheme under its National Social Assistance Programme (NSAP).

   • This government-backed pension plan is also known as National Old Age pension Scheme (NOAPS).

   • The pension amount can range between Rs. 300 to Rs. 500. 

4. Atal Pension Yojana (APY)

   Entry Age Criteria: 18-40 years of age when subscribing to the plan. The monthly pension will start at the age of 60 years.

   Maximum Investment Period: Minimum contribution of premiums should be 20 years or above.

   Features of Atal Pension Yojana (APY):

   • This is the best pension scheme to cover the social security of the citizens working in the unorganized sector.

   • Unorganized sector workers include agricultural laborers, small & marginal farmers, rickshaw pullers, blacksmiths, daily wage laborers, and more.

   • For a period of 5 years from joining the scheme, the Government of India also contributes 50% or Rs. 1000 (whichever is lesser) of the total contribution by the subscriber.

   • Based on the premiums deposited with the scheme, the pension plan subscriber will get a monthly pension b/w Rs. 1000 to up to Rs. 5000 per month from the age of 60 years.

   • The monthly pension increases if the pension plan is joined early.

5. Senior Citizens Savings Scheme (SCSS)

   Entry Age Criteria:  60 years of age or above OR persons within the age of 55-60 years who opted for a Voluntary Retirement Scheme/ Superannuation OR Retired Defense Personnel within the age group of 50-60 years.

   Maximum Investment Limit: As per the latest Union Budget 2023 announced on 1st February 2023, the Lump sum premium payment allowed is from Rs. 1000 to up to a maximum of Rs. 30 lakhs.

   Features of Senior Citizens Savings Scheme (SCSS):

   • This is the best pension scheme for senior citizens offered by Post Office.

   • Offers Single Life and Joint Life options in the pension plan.

   • It also offers Income Tax exemption benefits up to Rs. 1.5 lakhs.

   • Quarterly benefits are deposited in the SCSS account.

6. Varishtha Pension Bima Yojana (VPBY)

   Entry Age Criteria: 60 years of age and above.

   Investment Limits: Yearly premiums b/w Rs. 63,960 to up to Rs. 6,39,610.

   Features of Varishtha Pension Bima Yojana (VPBY):

   • This is the best old age pension scheme provided by the Government of India in association with the Life Insurance Corporation (LIC).

   • The pension payouts are done as per the decision of the subscriber in the frequencies of monthly/ quarterly/ half-yearly/ yearly.

   • Yearly pension payouts are offered b/w Rs. 6,000 to up to Rs. 60,000.

   • Tax exemptions on premium payments are allowed under Section 80CCC of the Income Tax Act, 1961.

7. Employee Pension Scheme (EPS)

   Entry Age Criteria: 18 years and above. Pension payouts are allowed from the age of 50 years.

   Maximum Investment Limit: Enrolling in this scheme is mandatory for every employee working for a minimum of 10 years in the public or private sector and earning a salary up to Rs.15,000 or less.

   Features of Employee Pension Scheme (EPS):

   • Minimum Rs. 1000 monthly pension payouts are allowed.

   • All the premiums paid in the scheme are converted into pension payouts without any changes.

   • The widow/widower receives the pension in case of the demise of the employee.

   • If the widow/widower remarries, then the children of the employees receive the monthly pension until the age of 25 years.

Top 7 Traditional Annuity Schemes for Senior Citizens

The best annuity pension plans for senior citizens that are offered by insurance companies are listed below:

1. SBI Life Saral Retirement Saver

   This is the best pension plan for senior citizens that guarantees a retirement corpus ensuring your financial independence during your golden years.

   Features of SBI Life Saral Retirement Saver Pension Plan:

   • The plan provides guaranteed bonuses in the first 5 years of policy payment.

   • The pension scheme also offers the rider option to get life coverage benefits.

   • The customers can also avail of all the tax exemptions as per the prevailing laws.

   • It offers guaranteed vesting benefits with reversionary bonuses.

2. ABSLI Guaranteed Annuity Plus

   This is one of the best old age pension plans available in the market right now. It offers a guaranteed income for as long as you or your spouse is alive. 

   Features of ABSLI Guaranteed Annuity Plus Pension Plan:

   • It comes with 10 payout options that you can choose per your needs. 

   • For instance, you can choose to receive a fixed monthly income for life or have the sum increase by 3-5% after a period of time.

   • It is a single premium policy, meaning you would have to pay a lump sum at the time of policy purchase.

   • The minimum amount has been fixed at Rs. 1.5 Lakhs.  

3. HDFC Life Pension Guaranteed Plan

   This is the best pension plan for senior citizens, ensuring post-retirement monthly income for their whole life.

   Features of HDFC Life Pension Guaranteed Pension Plan:

   • The maximum entry age is fixed at 85 years for a senior citizen. 

   • A single premium payment in HDFC Life Pension Guaranteed Plan will guarantee you a monthly income for life. 

   • You can choose either a deferred annuity option or an immediate annuity option. 

   • Further, you can purchase this policy for your wife. 

   • This ensures that even on your death, the income benefit continues until she lives.

4. ICICI Pru Guaranteed Pension Plan

   This is a monthly pension scheme for senior citizens looking for insurance protection and pension benefits after retirement.

   Features of ICICI Pru Guaranteed Pension Plan:

   • With a choice of over 10 annuity options, the ICICI Pru Guaranteed Pension Plan also lets you increase your monthly income through its top-up facility.

   • If you choose the immediate annuity option, you will receive a monthly income immediately following the purchase.

   • Under the deferred annuity option, you can receive the payouts after a certain period. 

   • In both cases, the pension amount continues till the time you live.

5. Max Life Forever Young Pension Plan

   This is a Unit Linked Pension Plan (ULIP), meaning that the money you invest in this plan will go towards market-linked funds such as equity and debt funds. Therefore, the returns you earn will be dependent on the market performances of these funds. As such, the risk of investment is higher than all the other options discussed.

   Features of Max Life Forever Young Pension Plan:

   • The fund options available to you are:

   • Pension Maximiser Option: It is a hybrid fund that invests in both debt instruments and equities. The risk profile is moderate.

   • Pension Preserver Option: A hybrid fund invests a majority in debt instruments. The risk profile is low.

   • A senior citizen in the age bracket of 60-65 years can buy this plan. The plan comes with annuity benefits and safeguards the future of your spouse financially in the event of your death within the coverage period.

   • A senior citizen in the age bracket of 60-65 years can buy this plan.

   • The plan comes with annuity benefits and safeguards the future of your spouse financially in the event of your death within the coverage period.

6. Tata AIA Life Insurance Guaranteed Monthly Income Plan

   This best old age pension plan by Tata AIA Life Insurance helps its customers meet everyday expenses and guaranteed life coverage for a happy retirement.

   Features of Tata AIA Life Guaranteed Monthly Income Pension Plan:

   • It offers a monthly income for twice the number of years of your policy term.

   • You are offered an option to increase your monthly pension by paying Large Premium Booster amounts.

   • You can avail of the tax benefits of up to Rs.46,800.

   • It offers you the flexibility of payment options of Annual/ Semi-annual/ Quarterly/ Monthly.

   • The pension plan also offers rider options to give you additional security in case of critical illnesses, hospitalization, accidental death, or total disability situations.

7. IndiaFirst Life Guaranteed Annuity Plan

   This is the best pension plan for senior citizens covering your whole life and helping you to unburden from future healthcare costs.

   Features of IndiaFirst Life Guaranteed Annuity Pension Plan:

   • It offers its customers to choose from 12 annuity options.

   • Return of Purchase (ROP) facility with Life Annuity option, Escalating life annuity option, Survivor annuity in Joint Life option, and Deferred Annuity option is also provided.

   • It makes sure to protect your loved one with annuity benefits financially.

   • The pension plan provides the Annuity Certain option that assures monthly income from a pre-decided period.

Summing It Up!

The changing demographics of India, with its increasing old-age population, demand a holistic approach that ensures the financial stability of senior citizens. The government and insurance companies have devised top pension plans for senior citizens in India, targeting this necessity. Having said that, it is a must for every working and old age population to subscribe to at least one of the best pension plans that fulfill their and their family’s financial needs once they retire.

FAQ's