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Pension for Senior Citizens

Senior citizens to get a 3-month Pension in Advance

On Friday, 27th March, the Central Government of India decided to give three months pension in advance to differently-abled, senior citizens and widows. This move is a part of the series of relief measures taken by the government as the country’s economy is hit hard by the ongoing Coronavirus pandemic and country-wide lock-down.

Under the National Social Assistance Program, a monthly pension is being given to the poor citizens, people with disabilities and widows. The programm comes under the scope of the Union Rural Development Ministry. There are about 2.98 crore beneficiaries under this programm and the pension funds are transferred directly to their bank accounts.

According to ASAP, Rs. 200 is given to senior citizens between the age of 60 to 79 years and Rs. 500 to citizens aged 80 years and above, on a monthly basis.

Rs. 300 per month is given to the widows between the age of 40 to 79 years and Rs. 500 to those who are above 80 years of age. For the disabled beneficiaries, the pension is capped at Rs. 300 per month up to 79 years of age and RS. 500 for people above 80 years of age. Besides this advance pension programme, Union Finance Minister Nirmala Sitharaman announced that an ex gratia amount of Rs. 1000 will be given to beneficiaries in two installments over the next three months. This amount is over and above the pension fund that has been given to beneficiaries on a monthly basis.

Moreover, in order to provide financial relief to citizens, the Reserve Bank of India has allowed banks to provide a moratorium on EMI payments on all types of term loan for next three months, starting from April 2020.

On the same day, the Finance Minister also announced a package of Rs. 1.7 trillion for the poor section of the country hit by the lockdown effective from 25th March 2020 for 21 days which is now extended till 3rd May. Central Government rolled out the relief package amounting 1% of its GDP, making an aggressive attempt to limit the economic damage caused due to COVID-19 and tackle the loss of livelihood of millions of poor people. The advance pension distribution of pension by the Central Government is a great relief for people who are dependent on their pension fund during the novel coronavirus pandemic.

Not having to worry about money is almost like not having to worry about surviving. The thought of not saving money for the future may shake many people. Looking at the current scenario, one thing we all have realised that it is uber important to start saving for the future. A common man is the worst to get affected by a disturbance in the economy. And we as the part of "aam janta” have heard about pension plans through family, relatives or at our workplace.

What are the pension plans?

Pension plans are retirement plans which need the policyholder to contribute some amount of funds. These funds are invested for the policyholder’s benefit. This accumulated fund is given to the policyholder after retirement for buying an immediate annuity plan.

Pension is the most commonly used saving schemes. In India, there are basically three components to the pension system. Namely, Civil servants pension, the mandatory pension programmes run by the Employee's Provident Fund Organisation (EPFO) and the National Social Assistance Programme (NSAP).

Why should you opt for pension plans?

Rising healthcare cost and inflation: With the rise in the life expectancy rate of people, there has been a rapid increase in healthcare inflation in the country. Hospitalisation and medication costs are soaring day by day. The cost of daily goods and services have gone up rapidly over a period of time. Having a pension plan will ease some tension and provide financial stability during your post-retirement phase.

A regular flow of income: Pension plans or retirement plans assure you a steady income flow after your retirement. These plans help you lead a comfortable and worry-free life after retirement. Some pension plans provide bonuses too.

Income tax benefit: Buying a pension plan at an early stage of your life also gives you income tax benefits under Section 80C of the Income Tax Act, 1961.

Lack of social security system: Unlike developed countries, India lacks social security in terms of measures taken by the governing body to provide income to the individual or his/her family when there’s no source of income to run a household. India yet lacks such schemes and programmes which will look after the benefit of retired as well as disabled people.

Rise in life expectancy rate: As per the report issued by the world bank, the life expectancy in 2017 in India was 68.78 years. The life expectancy has increased by 10% in almost 20 years. Higher the life expectancy, higher will be the amount needed after retirement.

We all work hard and save money in order to live peacefully after retirement. It is crucial to have enough savings after your retirement to sustain your lifestyle and meet healthcare expenses. Therefore, pension plans play a significant role in your financial planning. And to ensure a worry-free and quality days after retirement, you must start planning for your retirement well in advance.

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