Senior Citizen Saving Schemes
Top Five Senior Citizen Saving Schemes
|State Bank of India||ICICI Bank||Central Bank of India|
|Union Bank of India||Varishtha Pension Bima Yojana|
Senior Citizens Savings Scheme from State Bank of IndiaAny depositor can open an account by providing an application - Form A in addition to the deposit amount in the multiples of Rs. 1,000 and his/her age proof. The depositor can also operate other accounts. However, the aggregate deposit in all those accounts should not exceed Rs. 15 lakh. The deposits should also be restricted to either Rs. 15 lakh or retirement benefits, depending on whichever happens to be lower. The depositor can open the account individually or jointly with his/her spouse.
The depositor should be at least 60 years old on the date of opening of the account or in the age group of 55-60 years and had retired on superannuation or otherwise on the date of opening of the account. People who are 55 years old and had retired before the aforementioned rules came into existence can also open this account. The retired personnel of Defence Services (excluding civilian Defence employees) irrespective of the above age limits can also open this account. However, it is subject to fulfilment of other specified conditions. NRIs and Hindu Undivided Families are not eligible to open these accounts.
The depositor can withdraw money from the account but not until one year has passed. Even in that case, he/she would need to pay a certain amount of penalty.
Way of Deposit
The deposit can be made in cash if the amount happens to be lesser than Rs. 1 lakh. One can also provide cheques or demand drafts drawn in the favour of the depositor and endorsed in favour of the deposit office.
The scheme has a maturity period, following which it can be extended for a period of three years. If a depositor wants to renew the policy, he/she should make an application with Form B. This needs to be done within one year of the policy maturity.
Interest on Deposit
As per rules, the depositors shall be provided with an interest of 9 percent per year. The interest will be paid on the day each quarter comes to an end, such as 31st March, 30th June, 30th September and 31st December. Interest will not be calculated on compound rate.
The depositor may nominate one or more than one individual at the time of the account opening. Nomination can be done till the time the scheme is in action. The depositor needs to submit an application along with Form C and his/her passbook.
When the scheme matures, the deposit office will pay the account holder. However, the account holder will need to provide his/her passbook and a written application accompanied by Form E, which is a withdrawal form. However, if a depositor does not withdraw the money on maturity or closes it after that stage, it will be regarded as matured. In such a case, the depositor can close the account at any time as per his/her choice. However, the depositor will need to pay post maturity interest on the scheme. The rate will be calculated on a monthly basis and it will be the same as people are supposed to pay in case of savings accounts opened in the post offices. For example, if someone’s account matured in March and he/she closes it in May, then he/she will need to pay the interest from March to April.
Death of Depositor
If the depositor passes away before the account matures, it will be closed. The refund of deposit will be provided after an application is made with Form F. The whole payment along with interest will be paid either to the legal heir or the nominee. The legal heir will receive the money in case the nomination is not done in accordance with the rules or if the nominee has passed away.
In case the total amount that has to be paid, including interest, is less than Rs. 1 lakh, then the legal heir can get the amount by producing a letter of indemnity, an affidavit as well as a letter of disclaimer on the same, along with the depositor’s death certificate. All the documents need to be provided on stamp paper and should be included as an annexure to Form F.
Premature Closure of Account
The depositor can close the account at any time after a year has passed since the opening of the account. He/she can submit Form E and take back the deposit money. However, there are certain conditions in this regard. If the account is closed between one to two years of the opening of the account, then 1.5 percent of the deposit will be deducted. In case the account is closed after two years of the opening of the account, the penalty amount will come down to 1 percent of the deposit.
ICICI Bank Senior Citizens Savings SchemeIt is a Government of India product offered through ICICI Bank. It has an interest rate of 9.2 percent that originally came into effect from 1 April 2013. However, the Union Finance Ministry changes the rates as it deems fit. The fact that this has the backing of the national government makes it a safe financial investment in spite of the fact that it is being offered through a privately held organization.
The account holders can get direct credit of interest facilities. If the investor is not keen on using ECS or direct credit benefits, then he/she can choice the option wherein he/she will get four post-dated cheques each year. They will also get account statements that will contain complete information regarding their deposit transactions and balance. They can also access phone banking facilities. However, it is limited only to query solving.
The depositors cannot put in more than Rs. 15 lakh and the deposit has to be made in multiples of Rs.1,000.
Rate of Interest
The depositors will receive an interest of 9.2 percent per annum. However, it will be subject to taxes that will be deducted at source. The interest will be paid at the end of each quarter.
The scheme will last for five years. However, it can be extended for three more years. In order to extend the same, the scheme holder needs to submit a request in the first year of the scheme.
Premature Closure of Account
The scheme holder is not allowed to close the account before the first year of the opening of the account. In case the policy is terminated before the second year, 1.5 percent of the balance deposit amount will be deducted; and in case it is done after the second year, 1 percent of the balance deposit will be deducted.
Mode of Investment
The scheme holder can invest money via cheques, demand drafts or pay orders in favour of the scheme. The date on which the demand draft or cheque is realised will be treated as the value date.
People who are older than 60 years will be able to directly invest in the scheme. People who age between 55 and 60 and have retired can also open this account, but they need to open it within a month of getting their retirement benefits. People who have previously served in the Indian Armed Forces and are now retired can also invest. There is no age limit for them. However, the civilian employees of the Indian Armed Forces cannot apply for the same. One can also have a joint account with his/her spouse. However, HUFs and NRIs are not eligible.
The applicants need to submit a self-attested copy of any one document – passport, PAN card, senior citizen card, ration card, birth certificate, date of birth certificate from school, voter ID card and driving license. In case the citizen is between the ages of 55 and 60, he/she needs to provide the proof of the date on which his/her retirement benefit was disbursed along with a certificate by the employer.
Deposit Schemes of Union Bank of IndiaUBI is currently offering an extra rate component for senior citizens if they avail any of its various domestic term deposit schemes. The rate is 0.5 percent higher than the rates of interest being offered in the industry these days.
Any senior citizen can open this account. They can jointly open these accounts with people under the age of 60 years. This is a special benefit being provided to them. In case of such accounts, the name of the senior citizen will be treated as the first name in the account. NRI senior citizens will, however, not receive the excess interest rate being paid to the senior citizens who live in India.
A proof of age will be needed while opening an account. A policy seeker can provide his/her senior school leaving certificate that indicates his/her date of birth, birth certificate from a proper authority, LIC policy papers, passport, voter ID card or a pension payment order.
Once the bank verifies the age of the senior citizen, it does not need any other proof of age when the policy is being sold or renewed later on.
Senior Citizen Deposit Scheme by Central Bank of IndiaLike the other deposit schemes available for senior citizens, the one being offered by Central Bank of India offers additional interest over and above the normal rate of interest on any of their existing term deposit schemes. This facility is provided to fresh deposits as well as renewal of maturing deposits.
Amount of Deposit
The amount of deposit will vary on the basis of the deposit scheme that the policy seeker opts for.
Period of Deposit
Deposits will be accepted any time between 15 days, which is the minimum period as applicable to various deposit schemes, and 120 months. The minimum period varies, however, as per schemes.
Incentive on Rate of Interest
The policyholder will receive an extra interest of 0.5 percent in case they buy any term deposit scheme.
The policyholder will receive a passbook or a certificate according to the scheme that he/she opts for. For example, passbooks will be provided in case of Khazaana Plans and certificates will be provided if someone buys MMDC, QIDR or MIDR.
The policyholder can receive payment before the scheme matures as per the prevailing rules. However, it is subject to withdrawal of incentive of the relevant additional interest.
Loan or Advance against Deposits
Loans or advances against deposits are also provided, but the rules tend to differ with respect to individual policies.
Add-on Facilities for Senior Citizens in Bank Accounts
Senior citizens, who are older than 70 years, do not need to maintain any minimum balance in their accounts. Service charges are reduced by 20 percent for them. However, this is applicable for only basic services.
Varishtha Pension Bima YojanaVarishtha Pension Bima Yojana was revived by the Indian Government in its budget for the 2014-15 fiscal. This programme was originally introduced by the NDA in its previous term as the ruling coalition of India. The plan is currently being offered by Life Insurance Corporation of India. It has a total corpus of Rs. 6,095 crore and it is expected to help 3.16 lakh people. As of now, the plan will be in action until 14 August 2015.
The pensioner shall receive a pension as immediate annuity. The beneficiaries can choose a payment procedure as per their preference. In case the pensioner passes away in the interim, then there will be a refund of the purchase price.
The buyer should be at least 60 years old. The limits for pension payment will vary in the following way:
- Monthly – Rs. 500 to Rs. 5,000
- Quarterly – Rs. 1,500 to Rs. 15,000
- Half-Yearly – Rs. 3,000 to Rs. 30,000
- Yearly – Rs. 6,000 to Rs. 60,000
Payment of Purchase Price
A plan can be purchased by paying a lump sum. The pensioner can choose the purchase price or the pension amount. In case of yearly pensions, the purchase price will be at least Rs. 63,960 and at the most Rs. 639,610. In case of half-yearly policies, the minimum ceiling is Rs. 65,430 and the maximum ceiling is Rs. 654,275. In case of quarterly pensions, the maximum ceiling is Rs. 661,690 and the minimum ceiling is Rs. 66,170. For monthly pension plans, the maximum ceiling is Rs. 666,665 and the minimum ceiling is Rs. 66,665.
Mode of Pension Payment
Pension will be paid in only one mode – monthly, half-yearly, quarterly or yearly. Pension will only be paid through either NEFT or ECS. The first installment will be paid on the designated date using the date of purchase as the cut-off mark.
Pension Rates for Purchase Price
The pension rate for yearly policies will be 9.38069 percent per year. For half-yearly policies, it will be 9.17045 percent per year. For quarterly policies, it will be 9.06767 percent per year. For monthly policies, it will be 9 percent per year.
The account holders can be surrendered after the completion of15 years. The surrender value will be paid in the form of refund of the purchase price. However, in special circumstances such as treatment for terminal and critical ailments, the account holders can surrender the policy before 15 years. This facility is applicable for the spouse of the account holder as well. In that case, the account holder will get 98 percent of the purchase price.
Loans against this policy can be taken after three years have passed. The upper limit for a loan is 75 percent of the purchase price. The rate of interest to be paid on the loan is not constant and is determined by LIC. Loan interest can also be recovered from the pension that is supposed to be paid as per the policy. The loan interest will depend on the amount of occasions the pension is being paid. The outstanding loan amount, if any, will be deducted at the time the claim proceeds are paid.
The policy shall be subject to taxation, such as service tax. The tax will be decided by applicable rates as well as laws of taxation. The policyholder will need to pay the current rate of tax on the purchase price while buying the policy. When the benefits under the plan are calculated, the tax paid will not be taken into consideration.
Free Look Period
The buyers will have 15 days to look into the terms and conditions of the policy for 15 days after buying the policy. If they are not satisfied with what they see, they can return the policy within that period and state the reasons for not liking the same. In such cases, they will receive the purchase price without stamp duties.
Last Updated on : June 20, 2015