All about Senior Citizen Savings Scheme!

Senior Citizen Savings Scheme is one of the popular regular income schemes for retirees or those who are about to retire.

In India, people are getting aware of the fact that retirement planning is an important aspect of every individual’s life. There are various Government-backed investment instruments such as post office saving scheme which include the Monthly Income Scheme, National Savings Scheme, Public Provident Fund, Time Deposit, Senior Citizen Saving Scheme, etc. Among these, the Senior Citizen Savings Scheme is designed specifically to cater for the older age group citizens. The fundamental objective of the scheme is to aid senior citizens and ensure a regular flow of income.

SCSS permits investment for all individuals who have attained the age of 60 years and above. Moreover, as a special case, individuals in the age group of 55-60 years, who have retired under a Voluntary Retirement Scheme (VRS), also have been permitted to invest in the scheme.

Deposits under the scheme are required to be made with any post office in India or authorized banks or institutions. An eligible depositor can open one or more accounts, subject to the condition that the deposits in all accounts taken together will not exceed Rs 15 lakh. The investments get the benefit of Section 80C. Also, the source of the funds is immaterial, so you can also give the funds to your parents and they can do the investments (of course the tax benefits all accrue to them only). A depositor can open this account either in his/her capacity or jointly with a spouse. Therefore, a senior citizen couple can effectively invest up to Rs 30 lakh between both of them. Besides, the facility of nomination is also available.

The prevailing interest rate of the scheme in 2021 is 7.4% which is compounded quarterly. The minimum tenure of the scheme is five years and the same can be extended for a further period of three years. No withdrawal shall be permitted before the expiry of five years. However, premature closure of the account shall be allowed subject following conditions:

• After one year of opening the account, premature withdrawal is allowed. However, a 1.5% charge and a 1% charge of the total amount deposited will be charged in case of premature withdrawals after one and two years, respectively.