senior citizen fd: Hike in senior citizen FD? Additional interest rates should increase from 0.5% to 2%; FM gets proposal

The interest rates on fixed deposits (FDs) for senior citizens should be 2% more than the standard rate offered to general customers, said Bharat Pensioners Samaj, federation of pensioners in the country. In a letter addressed to Prime Minister Narendra Modi and Finance Minister Nirmala Sitharaman, Bharat Pensioners Samaj said, “… addressing the interest rates for senior citizens’ deposits is crucial. A revision from the current additional 0.25% to 0.50% to a more substantial 2% above the standard rate could effectively counteract the fall in the purchase value of their savings.”

On senior citizen fixed deposits, most of the public and private sector banks offer 0.25% to 0.50% higher interest rates than what they offer to the general public. Certain banks also offer some additional interest rates to super senior citizens as well. Usually, those who are 80 years and above are eligible for such additional rates.

Now, senior citizens get as high as 8.6% interest rate on senior citizen FDs in DCB Bank among well-known private sector banks. Among public sector banks, the interest rate on senior citizen FDs can go up to 7.9% in the Punjab & Sind Bank.

“Furthermore, extending comprehensive insurance coverage for senior citizens’ deposits in banks and post offices would provide an additional safety net, ensuring greater financial security,” Bharat Pensioners Samaj it mentioned.

Other demands for senior citizens

They have also asked to make pensions tax-free. “While old age relief in income tax exists, it’s insufficient to bridge the widening gap caused by inflation. Therefore, there’s a pressing need for the Government of India’s Ministry of Finance to reconsider the recommendations of the Sth CPC, specifically Para 167.11. Exempting pensions, along with Dearness Relief (DR) and Fixed Medical Allowance (FMA), from income tax could provide significant relief,” the letter added.”The crux of the issue lies in the diminishing purchasing power of pensions. Over time, inflation, coupled with the escalating costs of essentials like food and medical care, relentlessly erodes the value of pensions. This phenomenon traps many retirees in a financial quagmire, making it challenging to maintain the standard of living they were accustomed to while employed,” it mentioned. “TECS, in its consultation with the 5th CPC, astutely pointed out that a pension amounting to 67% of the last drawn salary is necessary for a retiree to sustain their pre-retirement standard of living. However, the ground reality falls short, with pensions currently pegged at only 50% of the last salary drawn. This gap is not just a statistic—it represents a tangible decline in the quality of life for countless senior citizens,” Bharat Pensioners Samaj further added.

‘Release 18-month DA arrear’

In a letter to Finance Minister Nirmala Sitharaman, Bharatiya Pratiksha Mazdoor Sangh has requested the Central Government to disburse arrears for the dearness allowance (DA) and dearness relief (DR) suspended for 18 months during the COVID-19 pandemic.

In the wake of the COVID-19 pandemic, the central government stalled the payment of DA and DR for 18 months from January 2020 to June 2021. In July 2021, the Centre hiked the dearness allowance and dearness relief for Central Government employees to 28% from 17% after a long pause.