Senior Citizen Savings Scheme -10 key facts on SCSS

Senior Citizen Savings Scheme -10 key facts you must know on SCSS

Senior Citizen Savings Scheme or SCSS is one of the most popular pension plans in India right now. To provide a regular guaranteed and safe flow of income to senior citizens, the Government of India had introduced the Senior Citizen Savings Scheme or SCSS in 2004. There are so many reasons for which it has got popularity among the retired or senior citizens of India since 2004.


Senior Citizen Savings Scheme

It is safe, secure, reliable and most importantly it is providing the highest interest rate in any Government backed pensions plans available in India. There are a plethora of reasons why one(Seniors) should choose Senior Citizen Savings Scheme post-retirement as their retirement benefits. So, today I have decided to write a blog post on Senior Citizen Savings Scheme -10 key points you should know about SCSS. Let’s find out 10 most important features of SCSS and why you should invest in SCSS.

#1. Why I should invest in Senior Citizen Savings Scheme or SCSS?

Your capital or investment remains safe and no chance of capital erosion. This plan is backed by the Government and therefore you can rely on it fully. Also, no part of this investment goes either directly or indirectly towards equity instruments. Therefore this bears zero minimum volatility from capital market ups and downs. This can be best viewed as an investment option which provides regular guaranteed income after retirement.

#2. What is the Eligibility criteria for Senior Citizen Savings Scheme or SCSS?

Generally, the SCSS account can be opened by a retired Indian resident who attained the age of 60 years. However, an individual who just completed 55 years of age but below 60 years can open this account if he retired by virtue of superannuation or Voluntary Retirement from Service subject to fulfilling the following two conditions:

  1. He has to open this account within one month from the date of receipt of his terminal or retirement benefits;
  2. The maximum investment amount cannot exceed the retirement benefits;

#3. What are the main features of Senior Citizen Savings Scheme or SCSS?

  • An individual can open this account either singly or jointly with a spouse;
  • Also, SCSS offers the benefits of Nomination facility either at the time of account opening or even later by submitting Form C;
  • A senior citizen can open many accounts but the maximum deposit is permitted up to Rs. 15 Lakhs;
  • This scheme is backed by Govt. of India and therefore is safe and secure;
  • The interest rate offered by SCSS is much higher than any other monetary scheme backed by G.O.I;
  • Works as regular income provider post-retirement, eradicating tensions among the senior citizens;
  • This scheme also provides a better return from Pradhan Mantri Vayu Vandana Yojana;
  • SCSS account can be linked with your savings account maintained with your bank with ease;
  • The interest rate is decided directly by the Finance Ministry time to time on a quarterly basis.
  • The interest rate offered by this scheme is  Government Securities +1% on 5 years tenure;
  • The applicable interest rate is offered annually but with compounding annually;
  • Interest is provided under this scheme in every quarter such as 30th June,30th September, 31st December and 31st March;
  • TDS is deducted from the interest earned if the interest exceeds RS.10000 per annum;
  • Cash deposit is admissible for account opened below Rs. 1 Lakh. However, if the investment amount exceeds Rs.1 Lakh only deposit with Cheque is permissible;
  • Most importantly, premature closure is permissible after one year unlike some Deferred annuity retirement plans;
  • If the account holder dies during the investment period, the joint holder gets the ownership of the account. But in case of single account holding, the nominee has to submit Form F  and additional two annexures duly attested by public notary.

#4. Maximum investment limit for Senior Citizen Savings Scheme or SCSS?

A senior citizen can deposit in this scheme a maximum of Rs. 15 Lakh in his own name. However, if his/her spouse has attained 60 years of age then a maximum amount of Rs. 30 Lakhs can be invested in this account. It is also important to know that any number of SCSS accounts can be opened subject to above investment restrictions.

However, the minimum investment in SCSS account is Rs.1000/- and investment can be made in multiples of Rs. 1000. One should bear in mind that investment in this account can be made once in a lifetime of its tenure. There is no option to increase the investment amount in future until maturity.

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#5. What is the interest rate for Senior Citizen Savings Scheme or SCSS?

At present this scheme offers a very lucrative interest rate of 8.7% per annum compounded quarterly. The interest rate for last two years is given below to show a better picture:

Period  Quarter Interest Rates(%)
2017-18 Q1 8.40%
2017-18 Q2 8.30%
2017-18 Q3 8.30%
2017-18 Q4 8.30%
2018-19 Q1 8.30%
2018-19 Q2 8.30%
2018-19 Q3 8.70%

As you can see the current R.O.I is very much lucrative as compared to other alike Govt. sponsored schemes.

#6. Documents required to open Senior Citizen Savings Scheme or SCSS?

  • An account opening form provided by the bank branch or can be downloaded online;
  • Two passport size photographs;
  • Address and identity proof such as a copy of the passport, PAN  card or declaration in form No 60 or 61 as per the Income Tax Act 1961, driving license, voters identity card or ration card;
  • Copy of Aadhar card ;
  • Carry original identity proof for verification at the time of account opening;

#7. Tax benefits offered by Senior Citizen Savings Scheme or SCSS

Investment in this account gets Income Tax deduction benefit upto Rs.150000/- u/s 80C. Also, income earned less than Rs.10000/- in a year is exempted from TDS.

#8.  Minimum investment tenure for Senior Citizen Savings Scheme or SCSS

The minimum investment tenure in SCSS account is 5 years. After the maturity period of 5 years, this account can be renewed for an additional 3 years only once in a lifetime. Therefore, it is a more liquid product in terms of other retirement annuity products available in India.

#9. Does Senior Citizen Savings Scheme offer premature withdrawals? If yes what is the penalty?

Yes. SCSS does offer premature withdrawal after one year from the account opening date. However, this foreclosure comes with some penalty. No pre-closure is permitted before one year. In case of premature withdrawal, the following penalty will be imposed:

  1. If the account is closed after 1 year but before 2 years: 1.5% of the account balance will be deducted as a penalty;
  2. Account closed after 2 years: 1% of the account balance will be deducted as penalty.

#10. Which Banks allow the opening of Senior Citizen Savings Scheme or SCSS?

The following Govt. banks including one private bank i.e.  ICICI Bank have been permitted to take investment under SCSS.

Allahabad Bank IDBI Bank Syndicate Bank
Andhra Bank Indian Bank UCO Bank
Bank of Maharashtra Indian Overseas Bank Union Bank of India
Bank of Baroda ICICI Bank United Bank of India
Bank of India State Bank of India Vijaya Bank
Corporation Bank State Bank of Mysore
Canara Bank State Bank of Bikaner and Jaipur
Central Bank of India State Bank of Patiala
Dena Bank State Bank of Travancore
Punjab National Bank State Bank of Hyderabad

Final words on Senior Citizen Savings Scheme -10 key points you should know about SCSS

Senior Citizen Savings Scheme

This retirement guaranteed income plan for senior citizens of India is one the most trusted product as of now. The interest rate offered by SCSS w.e.f 1st October 2018 is 8.70%, which is quite great by its standard. Therefore, those individuals who are retiring in the coming months can have a look at this safe Govt. sponsored scheme to meet their monthly needs post-retirement. In a nutshell, being a Govt. backed scheme this does not have to face any volatility or fear of capital loss.

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