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

When planning for life after retirement, you should thoroughly consider every aspect of your lifestyle. According to the FBI, internet scammers target older Americans because they tend to be wealthier, more trusting, and less likely to report fraud. Another 2015 report estimated that older Americans lose $36.5 billion each year to financial scams and abuse; there is a need for an internet safety guide for seniors when they want to choose investment plans online. 

They can choose investment plans that will meet their financial needs later in life. This includes setting up a retirement fund and religiously contributing towards it. This is important because, for most Indians, retirement translates to a lack of a steady income, so it helps to have funds to fall back on. Thankfully, the Government of India has provided 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 you must take advantage of when you retire. Here is all you need to know about it.

• The scheme’s eligibility criteria
• 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 defense personnel are eligible without 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 you must 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 extend your investment by one more year. You must remember 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, allowing senior citizens to gain from a sizeable payout. As of January 2019, the rate sits at 8.7% and is reviewed quarterly as the interest is compounded and credited quarterly.

Tax benefits

As per section 80C of the Indian Tax Act of 1961, SCSS investors can claim tax deductions of up to Rs.1.5 lakh every financial year based on 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:

• Visit a post office and register for an account.
• Approach any central public/private sector bank and complete the application form.
• Log onto the India Post website, download the application form, and upload it with all the required supporting documents.

Now that you have a better understanding of the critical elements of the Senior Citizen Saving Scheme, you must know that to truly benefit from it, it helps to make a sizeable investment. This way, you financially secure your golden years and reap the benefits. Financial advisors suggest diversifying your investment portfolio with safe long- and short-term investments in preparation for your retirement. Provident Funds (EPF/PPF) and fixed deposits are two highly recommended options. This is because a PF is easy to invest in and can grow without 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. 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 the highest FD interest rates in India, which works in your favor since you get the best rate on a long tenor. You can get up to 8.95% as a senior citizen and 8.60% as a regular investor on a tenor of 36 months and more, with interest payable at maturity.

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