When you retire, your main source of livelihood, i.e. your monthly income seizes to exist and you have to rely on different types of investments – be it fixed deposits, mutual funds, pension, and PPF savings and so on for your sustenance. But most traditional investment schemes do not offer good returns on investment. As such, you need a scheme that provides a wide range of benefits. One such scheme is the Senior Citizen Saving Scheme, launched by the government of India and here are a few things you need to know about it.
- Eligibility criteria
As the name suggests, this savings scheme is specially targeted towards senior citizens i.e. resident Indians up to the age of 60 years. You can also avail this scheme if you decide to opt for Voluntary Retirement Scheme (after 50 years of age). Moreover, retired defence personnel, irrespective of their age may also apply for the SCSS scheme.
- Availability of the scheme
This savings scheme meant for seniors is essentially a savings account that you can open in any of the authorised public or private sector banks in India, simply by filling a form and submitting basic documents. You can also visit your nearest post office and fill the scheme form and start depositing sums in it.
- Account opening and documents needed
You need to download the form of the SCSS 2004 scheme available on the official government website of the same name and fill it, providing your basic details such as your name, address, age, etc. You also need to provide the details of your preferred nominee/s including their name, age and contact details. Also, you must specify the amount to be awarded from the total investment to each of the listed nominees. The basic documents you need to provide include your ID and age proof and your address proof documents.
- Minimum and maximum deposit limits and premature withdrawal rules
The minimum amount you need to deposit in the SCSS scheme is ₹1000, whereas the maximum amount you can deposit is ₹1,500,000. Deposits over ₹1000 should be made in multiples of 1000. You may make cash deposits in this account, up-to a maximum of ₹100,000. Amounts exceeding ₹100,000 should be deposited via cheque or demand draft, and you need to provide your PAN card number for every deposit exceeding ₹50,000. You may also make premature withdrawals from the account. However, this is allowed only after 1 year and you are charged a penalty of 1% on premature withdrawals.
- Interest rate
Currently, the SCSS 2004 is one of the best deposit savings scheme in terms of interest pay-out. The Ministry of Finance reviews the interest rate provided on deposits in this account every quarter and a new interest rate becomes applicable. As of October 2019, an interest of 8.6% is provided on deposits parked under this scheme.
- Account Maturity
The senior citizen account comes with a maturity period of exact 5 years from the time the account is opened. However, if you prefer, you may extend the account post maturity as well. Extensions can be sought for 3 years and currently, this extension can be availed only once. Note that you need to make the extension request within 1 year from the time your account matures.
Final word: The Senior Citizen Savings Scheme is a government-backed savings scheme, which makes it one of the safest investment options. Moreover, it comes with a wide range of benefits including high interest rates, tax benefits on deposits, a medium investment term and premature withdrawal, making it a lucrative scheme indeed.
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