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Senior Citizens Savings Scheme (SCSS): Here’s all you need to know

Senior Citizens Savings Scheme

When planning for life after retirement, you should consider every aspect of your lifestyle thoroughly. Then you can choose investment plans that will meet your financial needs in the later stages of your life. This includes setting up a retirement fund and religiously contributing towards it. This is important because for most Indians, retirement translates to lack of a steady income, so it helps to have funds to fall back on. Thankfully, the Government of India has made a provision for retirement savings via the Senior Citizen Saving Scheme. This allows you to set up a steady flow of income for your golden years while earning profits through its high interest rate offerings.

The SCSS is an incredibly efficient investment option that you must take advantage of when you retire. Here is all you need to know about it.

  • The scheme’s eligibility criteria
  • In order to be eligible for this scheme, you must meet the following criteria.
  • You must be a resident citizen of India aged 60 years or above.
  • Retirees under 60 are also eligible for this scheme, provided they meet the superannuation or VRS rules, as applicable.
  • Retired defence personnel are eligible without the age constraints.

Minimum investment amount

You can invest a minimum of Rs.1,000 to start a Senior Citizen Saving Scheme. However, it is best to make a sizeable investment as you can only invest once per tenor. The maximum investment allowed is Rs.15 lakh and it is important to know that you cannot invest more than the amount you’ve received upon retirement. You can also make the investment individually or jointly but any amount under Rs.1 lakh must be paid through cash only. Alternatively, any investment over Rs.1 lakh must be made by cheque.

Investment tenor

The tenor for the Senior Citizen Saving Scheme is 5 years. This is applicable right from the day that you make the deposit. Upon maturity, you can choose to extend your investment by one more year. You must remember though, that this extension can only be done within the first year of maturity and only once per investment.

Applicable interest rate

This scheme offers a high interest rate that allows senior citizen to gain from a sizeable payout. As of January 2019, the rate sits at 8.7% and is reviewed every quarter as the interest is compounded and credited on a quarterly basis.

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 every financial year, basis their investment corpus.

Premature withdrawal policy

This scheme also allows for premature withdrawals. Withdrawals come at a nominal penalty fee and they are as follows:
  • 1.5% of the investment is deducted as a penalty if withdrawn before completion of 2 years.
  • 1% of the investment is deducted as a penalty if withdrawn after 2 years and before 5 years.

Available scheme application options

There are 3 main ways of applying for this scheme. They are as follows:
  • Visiting a post office and registering for an account.
  • Approaching any major public/private sector bank and filling out the application form.
  • Logging onto the India Post website, downloading the application form and uploading it with all the required supporting documents.

Now that you have a better understanding of the key elements of the Senior Citizen Saving Scheme, you must know that in order to truly benefit from it, it helps to make a sizeable investment. This way, you financially secure your golden years and reap the benefits. In preparation for your retirement, financial advisors suggest diversifying your investment portfolio with safe long- and short-term investments. Two of the highly recommended options are Provident Funds (EPF/PPF) and fixed deposits. This is because a PF is easy to invest in and can grow without requiring any of your attention. In the case of a fixed deposit, it helps you build a healthy retirement fund by virtually eliminating any investment risks.

The Bajaj Finance Fixed Deposit is the perfect example of a safe investment as it has the highest safety and credibility ratings. Both ICRA and CRISIL have given this FD the highest rating, MAAA and FAAA respectively, assuring you that your investment is secure. Furthermore, Bajaj Finance also offers one the highest FD interest rates in India, which works in your favour since you get the best rate on a long tenor. You can get up to 8.95% as senior citizen and 8.60% as a regular investor on a tenor of 36 months and more with interest payable at maturity.

Since your goal is to build a sizeable retirement fund, you get an additional 0.10% on FD renewals, adding even more value to your investment. To start investing for your retirement fund today, book an appointment online by filling out the application form.

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