PremiumPMVVY vs SCSS: Amid lowering fixed deposit (FD) interest rates at leading Indian banks, senior citizens are busy finding out better risk-free investment option. According to tax and investment experts, if an investor is looking for an assured investment return then Senior Citizen Saving Scheme (SCSS) is a good option. However, if a senior citizen is looking for an option that will give regular monthly income, then Pradhan Mantri Vaya Vandana Yojana (PMVVY) can be a good investment option for them.
Speaking on Senior Citizen Saving Scheme vs PMVVY Kartik Jhaveri, Director — Wealth Management at Transcend Consultants said, "Both SCSS and PMVVY yields 7.4 per cent annual interest rate. But, in the case of SCSS, one's interest rate may vary on the quarterly basis because it is one of the government-backed small saving schemes. While in the case of PMVVY, the interest rate remains fixed for the entire investment period. Since, there are speculations that Government of India (GoI) may curtail small savings scheme interest rate, PMVVY gives luxury to an investor to remain invested at an interested at the interest rate available at the time of investment."
Kartik Jhaveri of Transcend Consultants said that in SCSS, maturity period is five years while in PMVVY, lock-in period is 10 years. Jhaveri went on to add that PMVVY is LIC plan and as per the LIC website claims, PMVVY interest rate till 31st March 2022 is 7.4 per cent.
Highlighting the liquidity angle while comparing PMVVY with SCSS; SEBI registered tax and investment expert Jitendra Solanki said, "For those investors who want liquidity, SCSS is advisable for them as lock-in period in SCSS is five years while in PMVVY, one's money gets blocked for 10 years and one can't fish out money before 10 years of maturity period. But, in SCSS, an investor can withdraw one's money prematurely too by paying some penalty." He advised senior citizens to have a diversified portfolio so that if there is any financial emergency, they can use their SCSS investment without diluting their regular monthly income.
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