Senior Citizen Savings Scheme (SCSS): Eligibility, Interest Rate, Benefits & Calculation

Senior Citizen Saving Scheme

Your senior years are an important part of your life. To truly enjoy them, plan your retirement finances through the course of your career by not only setting aside a sizeable amount of funds but also investing wisely and safely. This is easy to achieve as you can turn to options such as the Senior Citizen Savings Scheme (SCSS). 

A government-backed savings instrument, SCSS allows you to earn even in your retirement years. The earnings through this scheme are quite high as it offers a high-interest rate that rivals some of the best offerings for regular investors. However, this scheme is only available to you after you turn 60 and requires a sizable investment to yield lucrative returns.

Here are the key elements of the SCSS explained in depth as well as tips on how you can save to create an investment corpus for it. 

Minimum investment amount for SCSS

The Senior Citizen Savings Scheme is one stellar example of how a senior citizen can benefit in India. To illustrate, you can start an SCSS investment with just Rs.1,000 and can invest a maximum of Rs.15 lakh based on your affordability and convenience. However, it is important to know that the amount you choose to invest cannot exceed the sum you receive upon retirement. Additionally, this investment can be made individually or jointly but any amount put forth under Rs. 1 lakh must be cash only. Alternatively, any investment over Rs.1 lakh must be made by cheque. To truly enjoy the benefits, it is best to make a sizeable investment as you can only invest once per tenor. 

Eligibility criteria for the Senior Citizen Savings Scheme

In order to be eligible for this scheme, you must meet the following criteria:

  • You must be an Indian resident aged 60 years or above
  • Retirees under 60 are also considered eligible provided you meet the superannuation rules
  • If you are retired defence personnel, age constraints do not apply

Interest rate and tenor applicable for the scheme

SCSS generates a hefty income as it parks your investment safely and offers a high-interest rate. As of January 2019, the interest rate stands fixed at 8.7%, but this rate is reviewed every quarter by the Ministry of Finance. Once the changes are put in place, the interest is compounded and credited to your account on a quarterly basis. Typically, the tenor for SCSS is 5 years from the day you make the deposit. However, after it matures, you can choose to extend your investment by another year. It is noteworthy to remember that this extension can only be done within the first year of maturity and only once per investment. 

After having understood the most basic elements of this scheme, it is time to move on to the benefits. Here are a few to help you better understand how your investment helps you in your post-retirement years.

Easily accessible

Due to the fact that this scheme caters to senior citizens, it is easily accessible throughout India at post offices and banks. This benefit caters to the convenience of the retired and reduces the effort needed to invest. 

Tax benefits

As per section 80C of Indian Tax Act of 1961, SCSS investors can claim tax deductions of up to Rs.1.5 lakh per year basis their investment amount. 

Investment flexibility with regard to the tenor and amount

The SCSS is incredibly flexible in terms of its tenor as it offers you an extension window of up to 1 year after maturity. Furthermore, you can invest any amount over Rs.1,000 in cash up to a lakh, this way you can reap the complete benefits of this investment even on a lower principal. 

The hassle-free premature withdrawal facility

The SCSS also allows for premature withdrawals; however, these come at the penalty and depend on the following factors.

  • If withdrawn before completion of 2 years, then 1.5% of the investment is deducted as a penalty
  • If withdrawn after 2 years and before 5 years, then 1% of the investment is deducted as a penalty

These rates are nominal and do not heavily penalize senior citizen investors.

Evaluating these factors, you can tell that the Senior Citizen Savings Scheme can be counted among the other senior citizen benefits in India as it is designed to simplify finances after retirement. However, in order to avail of this scheme, you must have a significant amount ready to invest. This is why it helps to start investing your savings as soon as possible in an option that is both secure and offers good returns. The Bajaj Finance Fixed Deposit is one such option as it boasts of high credibility standards and incredible investment returns.

Bajaj Finance offers one the highest interest rate on FD in India. By starting an FD with a tenor of 36 months and above, you can get up to 8.95% interest rate on FD as a senior citizen and 8.60% as a regular investor with payout at maturity. This FD also has the highest ratings from both ICRA (MAAA) and CRISIL (FAAA) indicating the highest level of security. This way, you can start early and keep reinvesting until it is time for you to retire. You can then put this hefty lump sum into the SCSS and enjoy your golden years with complete financial security. To start investing, simply fill out the online application form, and wait for a representative to get in touch with you.