My 69-year old grandmother feels she has made the best investment in her life, even if it is towards her twilight years. In this day and age when one can no longer rely on their children to look after them, the older generation has to start providing for their old age.

Today, my grandmother is getting Rs 2,000 every month from the government-sponsored Varishta Pension Bima Yojana -- a sum she will continue to get till the end of her life. It may be a paltry sum but it is adequate for her to feel she is not totally dependent on her sons to meet all her expenses.

Plus, more importantly, the initial sum of a little over Rs 200,000, becomes a small inheritance my granny has bequeathed to me. The one-time premium paid under the scheme is returned to the nominee on the death of the pensioner/policyholder.

It is not too late for senior citizens to opt for Varishta. The Centre has not decided to put an end to the scheme even as it is costing the centre over Rs 100 crore (Rs 1 billion) in subsidies alone since it has assured a nine per cent return even as the market rate of return is just about six per cent.

The scheme launched in July 2003 is expected to attract subscription of over Rs 6,500 crore (Rs 65 billion) by the end of the current fiscal. To date, the Life Insurance Corporation of India has issued 310,000 policies under the pension scheme with premium collections touching Rs 5,700 crore (Rs 57 billion).

Varishta Pension Bima Yojana -- a social security scheme to look after the country's ageing population -- has been designed on the basis of a fixed deposit scheme, guaranteeing nine per cent fixed interest for life.

What's more, the one-time premium paid will be fully returned to the nominee on the death of the pensioner. Such a scheme has attracted a wide spectrum of the population that mostly depends on interest income to take care of them post-retirement.

While the government has yet to specify the exact interest these 'grandfather-grandmother' bonds will offer, high level meetings are talking of taxable returns of 8.5 per cent. There is no specification as to whether the returns will be for life, since granny bonds are usually for a fixed tenure of 5-10 years.

With the Centre already bearing a subsidy of 3.5-4.0 per cent on Varishta Pension Bima Yojana, it will be further adding to its liabilities in view of its plans to offer "more than market rate of returns" on the Dada-Dadi bonds.

Varishta Pension Bima Yojana continues to be more attractive looking at the fact that the scheme offers higher rate of returns for life and the fact that the scheme is offered to those in the age bracket of 55 years and above.

The granny bonds would be applicable to senior citizens in the age bracket of 60 years and above. As such, Dada, Dadi, Varishta Pension Bima Yojana is a better bet as it guarantees returns for life, and qualified from the fact that there is no stopping the amount of funds coming into the scheme.

At the same time, investment into Granny bonds could be a good second avenue available. So what else is available in the market today? Government of India Relief Bonds offer 6.5 per cent tax-free returns and 8 per cent taxable returns.

Public provident fund offers a eight per cent coupon rate. Post office monthly schemes offer 8 per cent -- but these are the interest rate prevalent today.

With a soft interest rate bias, the present-day returns could fall further tomorrow. Banks are offering as low as five per cent on fixed deposits.

What's seen as being some negatives to the Varishta Pension Bima Yojana is policyholders' inability to withdraw funds before 15 years. However, in special circumstances there is the option of withdrawal in the case of the policyholder suffering from some critical illness. Alternatively, the government allows a loan against the scheme after a period of three years.

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