Senior citizen savings scheme ( SCSS )

The Senior Citizens Savings Scheme (SCSS) is primarily for the senior citizens of India. The scheme offers a regular stream of income with the highest of safety and tax saving benefits. It is an apt choice of investment for those over 60 years of age.

1. Why should you invest in SCSS?

Investing in SCSS is a good opportunity for senior citizens above 60 years to make money. This is an effective and long-term saving option which offers security and added features that are usually associated with any government-sponsored savings or investment scheme. These schemes are available through certified banks and post offices across India.

2. Eligibility for SCSS

The following people/groups are eligible to opt for SCSS: 1. Senior citizens of India aged 60 years or above. 2. Retirees who have opted for the Voluntary Retirement  Scheme (VRS) or Superannuation in the age bracket 55-60. Here the investment has to be done within a month of receiving the retirement benefits. 3. Retired defense personnel with a minimum age of 50 years. 4. HUFs and NRIs are not allowed to invest in this scheme.

3. Investment Amount

An individual can invest a maximum amount of Rs 15 lakhs, individually or jointly in an SCSS account (in multiples of Rs 1,000). The amount invested in the scheme cannot exceed the money that has been received on retirement. Hence, the individual can invest either Rs 15 lakhs or the amount received as a retirement benefit, whichever is lower. The account can be opened by cash for an amount below Rs 1 lakh and by cheque for an amount exceeding Rs 1 lakh.

4. Benefits of investing in SCSS

  1. Safe and Reliable: This is an Indian government-sponsored investment scheme and hence is considered to be one the safest and most reliable investment options.
  2. Simple and easy process: The process to open an SCSS account is simple and can be opened at any authorized bank or any post office in India. It is also transferable across India.
  3. Good returns: At 8.6 % the return rate is very good as compared to a savings or FD account.
  4. Nomination: Nomination facility is available at the time of opening an SCSS account by means of submitting an application as part of Form C. This submission is also accompanied by the passbook to the Branch.
  5. Tax benefits: Tax deduction of up to Rs 1.5 lakh can be claimed under Section 80C of the Indian Tax Act, 1961.
  6. Flexible: The tenure of this investment scheme is flexible with an average tenure of 5 years which can be extended up to 3 additional years.

5. How to open an SCSS account

An SCSS account can be opened in any of the authorized banks or post office branch across India with following documents:

  1. Form A has to be filled for opening an SCSS Account.
  2. Identity proof like PAN card, Passport to be presented.
  3. Address proof such as Telephone bill, Aadhar card is mandatory.
  4. Document for proof of age is required. This could be in the form of a Passport, Senior
  5. Citizen Card, a Birth certificate issued by the Corporation or Registrar of Births and Deaths, Voter ID card, PAN card etc.
  6. 2 Passport size photographs.

All the above documents must be self-attested.

6. Interest rate on SCSS Account

Below are the interest rates offered historically on the Senior Citizens’ Savings Scheme:

Period Interest Rate
Up to 2012 9%
2012-13 9.3%
2013-14 9.2%
2014-15 9.2%
2015-16 9.3%
2016-17 8.5%
2017-18 (Q1) 8.4%
2017-18 (Q2) 8.3%
2017-18 (Q3) 8.3%
2017-18 (Q4) 8.3%
2018-19 (Q1) 8.3%
2018-19 (Q2) 8.3%
2018-19 (Q3) 8.7%

7. Tenure of the fund and withdrawal

The tenure of this scheme is 5 years with the option to extend it for 3 more years. In order to extend the scheme for another 3 years after the completion of the 5-year tenure, the investor is required to submit the duly filled Form B for the extension of the scheme. Only one extension is allowed, and such extended accounts can be closed after one year of extension without any penalty.

Premature withdrawals are allowed but only after a year of opening an account. If the closure of the account takes place after one year but before the end of 2 years, 1.5% of the deposit is deducted in the form of pre-mature withdrawal charges. Upon closure of the account after 2 years an amount equal to 1% of the deposit shall be deducted as charges.
In the event of the death of the depositor, no charges or penalty is levied for the premature closure of the account.

8. Banks applicable for SCSS Account

  1. Allahabad Bank
  2. Andhra bank
  3. Bank of Maharashtra
  4. Bank of Baroda
  5. Bank of India
  6. Corporation Bank
  7. Canara Bank
  8. Central Bank of India
  9. Dena Bank
  10. IDBI Bank
  11. Indian Bank
  12. Indian Overseas Bank
  13. Punjab National Bank
  14. State Bank of India
  15. Syndicate Bank
  16. UCO Bank
  17. Union Bank of India
  18. Vijaya Bank
  19. ICICI Bank

To sum it up, SCSS is a very good scheme for senior citizens who want a decent risk free return on a corpus fund. At an 8.5% interest rate and an investment amount of 15 lakhs, the monthly income is stated to be Rs 10,625 per month for each investor.