Senior Citizens Ask PM and FM For 2% Extra On FD Rates Ahead Of Budget

Senior citizen groups are reportedly appealing to the central government ahead of the annual budget for higher fixed deposit rates for senior citizens.

What Happened: Bharat Pensioners Samaj, a federation of pensioners in India, has appealed to Prime Minister Narendra Modi and Finance Minister Nirmala Sitharaman to address the financial concerns of senior citizens, Economic Times reported.

In a letter, they reportedly proposed a significant increase in fixed deposit (FD) interest rates for seniors, suggesting a rise of 2% above the standard rates to counteract the diminishing purchase value of their savings.

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Currently, most banks offer senior citizens 0.25% to 0.50% higher interest rates on FDs than the general public. The proposal aims to enhance financial security for seniors amid rising costs of essentials like food and medical care.

Why It Matters: The pensioners’ federation also advocates for comprehensive insurance coverage for senior citizens’ deposits in banks and post offices, providing an additional safety net. Additionally, they seek tax exemptions on pensions, dearness relief (DR) and fixed medical allowance (FMA) to alleviate the financial burden on retirees.

Highlighting the impact of inflation on pensioners’ purchasing power, the federation emphasized the need to bridge the gap between the last drawn salary and the current pension amount. They cited recommendations from the 5th Central Pay Commission, which suggested a pension amounting to 67% of the last drawn salary for retirees to maintain their pre-retirement standard of living.

In a separate request, Bharatiya Pratiksha Mazdoor Sangh urged Finance Minister Nirmala Sitharaman to release 18-month arrears for dearness allowance (DA) and dearness relief (DR) that were suspended during the Covid-19 pandemic for government employees. The suspension occurred from January 2020 to June 2021, and the arrears are sought after the subsequent hike in DA and DR to 28% from 17%.

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Posted In: Personal FinanceBudget 2024