Best Saving Option for Senior Citizens: Special FDs, PMVVY, or SCSS?

Updated on: 14 Dec 2021 // 4 min read // #mmm news
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2020 is probably one of the most challenging times to choose the perfect financial plans, particularly for senior citizens. When you are young, you have enough time horizon as well as risk appetite. On the other hand, when you are close to retirement or have already crossed the 60s, you cannot risk the capital at all. What one needs in a Senior Citizen Saving Plan is a Risk-Adjusted Return steadily month on month through the life span.

Senior Citizen Fixed Deposits with banks, Post office Senior Citizen Saving Scheme, and LIC’s Pradhan Mantri Vaya Vandana Yojana 2020 are three of the best saving options for seniors. Amid COVID 19 uncertainties where debt mutual funds have lost the sheen, it is imperative to compare these senior citizen products and find out which is the best saving option for pensioners and retired professionals.

Any day the peace of mind that comes with FDs is incomparable, however in the falling rate regime, returns are lowering. Despite the launch of special Senior Citizen FD schemes by SBI, HDFC, and ICICI Banks, the effective returns are low in the face of lowered overall FD rates.

Top Senior Citizen Saving Options in 2020

ProductTenor (in years)Max ReturnsTypeQuantum

SBI We Care



Fixed Deposit

No Limit

HDFC Senior Citizen Care



Fixed Deposit

No Limit

ICICI Bank Golden Years FD



Fixed Deposit

No Limit



7.40 p.m. (7.66 p.a.)

Pension Plan

Max 15 Lakhs

Post Office Senior Citizen Saving Scheme

5 year lock-in

7.40 p.a

Small Saving Scheme

Max 15 Lakhs

*rates as on 27 May, 2020


Which is the best Fixed Deposit for Senior Citizens?

Currently ICICI Bank Golden Years FD offers the best rate of return at 6.55 % for senior citizens. All the top banks including SBI, HDFC, and ICICI, have launched limited time special FD schemes for senior citizens. These schemes offer an additional rate of interest as a premium over the regular rate. You can apply online as well as offline and book these schemes to tap these limited-time offers.

Why opt for Senior Citizen Fixed Deposits?

  • Choose FDs for definitive & predictable returns. Capital protection is one of the best benefits of opting for a Fixed Deposit with your bank.
  • Your savings in the form of Fixed Deposits are safe with banks. If you opt for government-owned banks like SBI, the assurance is even more. Also, the amount up to Rs 5 lakh is insured by the Deposit Insurance and Credit Guarantee Corporation (DICGC). Thus your deposits and saving bank account balance up to 5 lakh is safe with any bank registered by RBI in India.
  • With the latest senior citizen FDs special schemes, you earn 0.75-0.80% higher return than regular FDs for the general public.

What to watch out for when saving through FDs?

  • Inflation- The annual return of around 6.5% is too low as inflation in our country is mostly close to 5 %. The real return on FDs is thus less, making them a less attractive saving deal.
  • Tax implication- Fixed Deposit incomes are taxable as per your income tax slab rate. Hence, if you are under 30% tax slab, your real-time return will be around 4.5-5% only.
  • 5 to 10 years FD schemes give you maximum return, but they have fixed tenures and thus make a less liquid saving option.

Should senior citizens go for FDs?

At 0.75 to .80 %, additional returns FDs do offer a better rate of return to senior citizens. However, these are not the best savings option. You should use FDs to park money you may need at a fixed date in a near future. Based on your goals and risk appetite, you should use FDs in your kitty. One of the best ways to make the best use of FDs is laddering. Opt for different tenures to make the most.

Also Read: Investing in COVID Times: Dos & Don’ts of Fixed Deposits for Maximum Returns


PMVVY modified 2020 is open to the public from 26 May 2020 for three financial years. The scheme is a 10 year pension plan backed by the GOI and administered through Life Insurance Corp. of India (LIC). The USP of this outstanding investment & pension plan is the highest return for Senior Citizens. The pension benefit is capped at 15 Lakh.

At 7.66% p.a. the rate of interest is better than any of the bank FDs & SCSS. You get the choice to earn interest monthly or annually. The income is however, taxable.

Also Read: LIC Pradhan Mantri Vaya Vandana Yojna 2020: Check Interest Rate & Benefits


SCSS is one of the best small savings schemes for senior citizens. The rate of interest is reduced to 7.40% per annum recently, yet it is an attractive option. The tenor is five years and can be extended by another three years.

The best part is its applicability for tax deduction up to 1.5 lakh per annum under Section 80C of the Income-tax Act, 1961.

When compared with PMVVY, the lower tenor and tax benefit make it a more suitable and liquid investment option.

Final Words: Tips to invest

  • It is advisable to determine asset allocation and diversify basis your risk appetite & goals.
  • Never put all eggs in a single basket. Diversify your investment bag by putting your funds in different sets of options.
  • With SCSS & PMVVY having a limit of 15 Lakh, you certainly would need to look for more options to align your fund. FDs do offer a good choice. However, it should not be the only option.
  • You can also contribute some portion to GOI Saving bonds as they offer 7.75 % p.a.
  • Ideally, go for a combination of FDs, SCSS, PMVVY, GOI bonds, & debt mutual funds.