The Senior Citizens Savings Scheme (SCSS) offers a regular stream of income and tax-saving benefits, with the highest of safety. Some of these offer personalized services along with higher interest rates for senior citizens.
Senior citizens above 60 years of age usually look for the best place to keep their savings safe post-retirement while earning a moderate rate of return on them. Investment options such as bank FDs and RDs, post office FDs and RDs, Senior Citizens’ Savings Scheme (SCSS), National Pension System (NPS), Pradhan Mantri Vaya Vandana Yojana (PMVVY), and mutual funds are some of the investment avenues for senior citizens. Some of these offer personalized services along with higher interest rates for senior citizens.
The Senior Citizens Savings Scheme (SCSS) offers a regular stream of income and tax-saving benefits, with the highest of safety. Though options like mutual funds are relatively high-risk and high-return funds, low-risk fixed return investment options like bank Fixed Deposits, post office FDs, PMVVY and SCSS are also needed. Experts say getting an ideal portfolio totally depends on the need of the senior citizen. However, one should have the combination of both high-risk high-return funds and low-risk fixed return investment options, to get the best return along with wealth creation.
Senior Citizens Savings Scheme (SCSS), the government-backed savings scheme, is known to be more secure, unlike bank FDs, because the investments are held with the government. SCSS comes with a tenure of 5 years which can also be extended by 3 years.
SCSS is a long-term saving option that offers security along with added features that are usually associated with any government-sponsored savings or investment scheme. In an SCSS account, one can invest up to Rs 15 lakh, both individually and jointly. An investor can invest whichever is lower, either Rs 15 lakh or the amount received as a retirement benefit. The amount invested cannot exceed the money that has been received on retirement.
The interest you earn from the SCSS account is credited to the investor’s linked savings account at the same post office. Investors can open an SCSS account at all India Post Offices. Apart from regional post offices, both public and private sector banks also offer the SCSS account. Investments up to Rs 1,50,000 lakh in a year in SCSS are tax deductible, and the current interest rate is 8.7 per cent, which is taxable.
In the case of premature withdrawal, penalties are applicable. The penalty on premature exit is charged at 1.5 per cent of the deposit amount if you exit from the scheme before completion of 2 years from the date of account opening, and 1 per cent of the deposit amount as penalty is charged if you exit from the scheme within 2 years or less than 5 years from the date of account opening.