Planning for retirement is crucial to ensure financial stability and independence in old age. The government provides various savings schemes designed to promote financial security and peace of mind during retirement. These schemes provide regular returns, tax benefits, and financial security, catering to different income levels and risk preferences. With these schemes, retirees can create a balanced financial plan that supports their lifestyle and healthcare needs.

Let’s explore the best government-backed schemes for a worry-free retirement.

Employees’ Provident Fund (EPF)

The EPF is a retirement savings scheme for salaried employees. Employees contribute 12% of their basic salary and dearness allowance, with an equal contribution from the employer. The current interest rate is 8.25%. The fund matures at 58 years of age, providing a lump sum amount with accrued interest. Partial withdrawals are allowed for emergencies. Contributions qualify for tax deduction under Section 80C of the Income Tax Act.

Also Read: Loan Options for Senior Citizens: How to secure financing in retirement

National Pension System (NPS)

The National Pension System (NPS) is a market-linked retirement scheme that allows individuals to build a corpus through diversified investments in equity, government bonds, and corporate debt. Returns vary based on market performance. Subscribers can claim tax benefits up to Rs 1.5 lakh under Section 80C and an additional Rs 50,000 under Section 80CCD(1B).

Pradhan Mantri Vaya Vandana Yojana (PMVVY)

PMVVY is a pension scheme designed for senior citizens aged 60 and above. It offers a guaranteed return of 7.4% for 10 years, providing financial security against market volatility. The maximum investment allowed is Rs 15 lakh per individual. The scheme offers a fixed monthly, quarterly, or annual pension based on the investment amount. Upon maturity, the principal is returned to the investor. In case of the investor’s death during the policy term, the purchase price is paid to the nominee.

Senior Citizens’ Savings Scheme (SCSS)

SCSS is one of the highest interest-paying schemes for senior citizens aged 60 and above. The current interest rate is 8.2%, making it an attractive option for conservative investors. The maximum investment limit is Rs 30 lakh, with a tenure of 5 years, extendable by an additional 3 years. Interest is paid quarterly, ensuring a regular income stream. Investments in SCSS qualify for tax deduction under Section 80C. However, the interest earned is taxable.

Public Provident Fund (PPF)

PPF is a long-term savings scheme backed by the government, offering a current interest rate of 7.1%. It has a lock-in period of 15 years, extendable in blocks of 5 years. The minimum annual investment is Rs 500, while the maximum is Rs 1.5 lakh. PPF enjoys an EEE (Exempt-Exempt-Exempt) status, meaning the investment, interest earned, and maturity amount are all tax-free. Partial withdrawals and loans are permitted after five years. PPF is suitable for individuals seeking low-risk, tax-efficient growth. Its long tenure and tax benefits make it a reliable tool for retirement planning and wealth creation.

Atal Pension Yojana (APY)

Atal Pension Yojana (APY) is aimed at unorganised sector workers and low-income groups, providing a guaranteed pension after retirement. Subscribers can choose from fixed pension options ranging from Rs 1,000 to Rs 5,000 per month. Contributions depend on the age at entry and the desired pension amount. The government contributes 50% of the subscriber’s contribution (up to Rs 1,000) for five years for those joining before 40 years of age.

Adhil Shetty, CEO of Bankbazaar.com, says, “When planning for retirement, remember that inflation is your silent enemy. Diversify your investments across fixed deposits, mutual funds, PPF, and NPS to balance risk and returns. Health insurance is a must to avoid eroding your savings during medical emergencies. Focus on generating a steady passive income through dividends, rental income, or annuities. Start early, invest consistently, and reassess your portfolio regularly to align with changing market conditions and personal goals.”

A secure retirement requires careful financial planning and a diversified investment strategy. Government-backed schemes ensure low risk and guaranteed returns, helping retirees enjoy a stress-free and financially independent life after retirement.