Senior Citizens Savings Scheme: A Safe Retirement Option
The Senior Citizens Savings Scheme (SCSS) offers the highest level of safety, along with a regular stream of income, and tax-saving benefits. Note that options like mutual funds also offer high-return but they are relatively high-risk.
SCSS offers a tenure of 5 years which can also be extended by 3 years.
After retirement or people above 60 years of age usually look for safe places to keep their savings, with the hope of earning a moderate rate of return on them.
The Senior Citizens Savings Scheme (SCSS) offers the highest level of safety, along with a regular stream of income, and tax-saving benefits. Note that options like mutual funds also offer high-return but they are relatively high-risk. SCSS, on the other hand, is a low-risk fixed return investment similar to PMVVY, bank FDs, and post office FDs.
Senior Citizens Savings Scheme, unlike bank FDs, is backed by the government and is known to be more secure, as investments are held with the government.
SCSS offers a tenure of 5 years which can also be extended by 3 years. From 1 July 2019, SCSS offers an interest rate of 8.6 per cent per annum. The minimum amount needed to open an SCSS account is set at Rs 1000 and the maximum balance that can be retained cannot exceed Rs 15 lakh.
If you are planning to opt for this scheme, here are some of the things you need to know about the Senior Citizens Savings Scheme;
• Other than senior citizens or people above 60 years of age, SCSS account can also be opened by an individual who has retired on superannuation or under VRS. Individual’s above age 55 years but less than 60 years, can also open the account. However, the account needs to be opened within 1 month by the retired after receiving his/her retirement benefits and the deposit amount should not exceed the amount of retirement benefits.
• Senior Citizens Savings Scheme comes with a maturity period of 5 years, however, by giving application in prescribed format, the tenure can further be extended by 3 years.
• You can operate more than one account, either jointly with your spouse or as an individual. Joint accounts can be opened with the spouse and the first depositor is the investor. You can invest up to Rs 15 lakh or the amount received as a retirement benefit (whichever is lower), in an SCSS account, both individually and jointly.
• Even though the SCSS account can be opened both by cash and cheque, the amount has to be below Rs. 1 lakh for cash, however for cheque, the amount can go above Rs. 1 lakh.
• You can select a nomination either at the time of opening the account or later after opening the account.
• The maximum investment in SCSS can only be made by adding balance in all accounts, even though any number of accounts can be opened in any post office. You can also transfer these accounts from one post office to another.
• The interest received is auto-credit into the savings account of the depositor, which can be withdrawn through either through PDCs or Money Order. The interest earned by the investor from the SCSS account is credited to the investor’s linked savings account at the same post office.
• Investors can premature closure their SCSS account, but penalties are applicable. For instance, if the account is closed within one year, a deduction of 5 per cent from the deposit amount is deducted and if closed after 2 years 1 per cent of the deposit is deducted.
• Tax Deducted at Source (TDS) is deducted on interest, if the interest amount is more than Rs 10,000 per annum. Investments under this scheme also make you qualify for the benefit of Section 80C of the Income Tax Act, 1961.