SBI Special FD vs LIC Pension Scheme: Which One Is Better For Your Retirement?


In India, senior citizens mostly opt for either fixed deposits or monthly pension schemes to cherish retirement perks. SBI Wecare fixed deposit scheme launched by India’s largest lender SBI has tailored primarily this scheme for senior citizens of the country. This scheme generates high and secure returns those who are above the age of 60 years.

But in the same segment, LIC has recently revised the interest rates of Pradhan Mantri Vaya Vandana Yojana (PMVVY). This pension plan introduced in 2017, will carry a fixed interest rate for FY 2020-21. But as a senior citizen which scheme is going to be your ideal retirement partner during the amid of falling interest rates? No worry, the solution is waiting for you below. So let’s have a look.

SBI Wecare FD scheme

The scheme is eligible for those who are aged sixty years and above. Currently, the bank is offering 6.2% interest rate for a tenure period 5 years to 10 years. Investors can invest in this scheme till September 30. In case of premature withdrawal, the investment made by an individual will fetch an interest rate of 5.8%. Under the scheme, the interest rate will be determined against TDS. Therefore, TDS is deducted if the interest received is more than Rs.50,000 during a fiscal year. An individual can choose to pay out interest monthly or quarterly for term deposits, and he / she can also avail loan against this scheme.

Pradhan Mantri Vaya Vandana Yojana

An individual is eligible for the scheme if he / she is aged 60 or above. PMVVY comes with a tenure of 10 years and one can opt from monthly, quarterly, half-yearly or yearly mode of pension. During FY21 the scheme is offering an assured interest rate of 7.40% per annum which is higher than the SBI Wecare FD scheme. A senior citizen can withdraw a minimum pension amount of Rs.1000 p.m up to a maximum of Rs.9,250 p.m depending on the amount invested in the scheme. One can invest under the scheme up to Rs.15 lakh and also can borrow up to 75 per cent of the amount of the purchase as a loan. Premature withdrawal is also available for an investor in case of emergencies, and in such situations, 98% of the purchase price is paid back to the investor.


Experts recommended that both the scheme comes with some merits and demerits. Hence, it is better to opt PMVVY if someone is looking for higher returns with tax benefits. As PMVVY comes with tax exemptions of up to Rs. 1.5 Lakh on the deposit amount under section 80C.


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