In a welcome development for senior citizens, the central government will launch a new pension scheme tomorrow that will have a fixed rate of 8 percent. The interest rate of 8 percent will be applicable on the savings of senior citizens. The fixed rate of 8 percent would be very beneficial for senior citizens since standard fixed deposit (FD) rates offered by banks have come down in the 6 to 7 percent range. The new pension scheme will be operated by the Life Insurance Corporation (LIC). The scheme can be purchased offline as well as online. It is meant only for senior citizens aged 60 years or above. A statement issued by the Finance Ministry read, “Scheme provides an assured return of 8 per cent per annum payable monthly (equivalent to 8.30 per annum effective) for 10 years.”
Under the scheme, pension will be paid at the end of each period, and the pensioner will have the option to choose the frequency of payment, which can be monthly, quarterly, half-yearly or annually. Pensioners can choose the frequency at the time of applying for the pension scheme. Another good thing about the scheme is that it is exempted from Goods and Services Tax (GST). After 3 years of purchasing the policy, pensioners can also avail loan against the policy to meet any urgent cash requirements.