Retirement Plans: After retirement, individuals typically lack a consistent income source, making it crucial to plan ahead for financial stability. For those hesitant to invest in the stock market due to its fluctuations, the government offers several excellent savings schemes that can ensure financial security during retirement.
EPF
The Employees’ Provident Fund (EPF) is a retirement savings initiative aimed at salaried employees and is widely recognized in India. Under this scheme, employees contribute 12% of their basic salary along with dearness allowance, with employers matching this contribution monthly. Of the employer’s contribution, 8.33% is allocated to the Employee Pension Scheme (EPS), while 3.67% goes into the Employee’s Provident Fund. This fund accrues annual interest, with the current rate set by the government at 8.25%.
NPS
The National Pension System (NPS) is a market-linked retirement plan that enables individuals to accumulate a substantial fund through a diversified portfolio that includes equities, government bonds, and corporate debt.
PMVVY
The Pradhan Mantri Vaya Vandana Yojana (PMVVY) is a pension scheme tailored for senior citizens aged 60 and above, aimed at providing financial security in their later years. This scheme guarantees a return of 7.4% over a period of 10 years, with returns unaffected by market volatility, thus ensuring essential financial stability during this stage of life.
SCSS
The Senior Citizens’ Savings Scheme (SCSS) is one of the highest-yielding options available for senior citizens aged 60 and above. Currently, this scheme offers an interest rate of 8.2%, making it an appealing choice for those who prefer to avoid market risks and seek fixed returns on their investments. The maximum investment limit for this scheme is Rs 30 lakh, and it has a tenure of 5 years.
PPF
The Public Provident Fund (PPF) is a long-term savings program that currently provides an interest rate of 7.1%. It features a mandatory lock-in period of 15 years, which can be extended in increments of five years. Investors are required to contribute a minimum of Rs 500 each year, with a maximum investment cap of Rs 1.5 lakh annually. PPF falls under the EEE (Exempt-Exempt-Exempt) category, indicating that the contributions, interest earned, and maturity proceeds are all exempt from taxation.
APY
The Atal Pension Yojana (APY) is a government initiative in India aimed at providing pension benefits to workers in the unorganized sector and those from low-income backgrounds. This scheme guarantees a pension upon retirement, with subscribers able to select fixed pension amounts ranging from Rs 1,000 to Rs 5,000 per month. The contributions required for this scheme vary based on the subscriber’s age and the chosen pension amount. For individuals who enroll before turning 40, the government will match 50% of their contributions (up to Rs 1,000) for a duration of five years. The eligibility age for joining the Atal Pension Yojana is between 18 and 40 years.