Last Updated on 9 months by Anoob P T
The Senior Citizen Savings Scheme (SCSS) is a savings scheme sponsored by the Government of India for well being of seniors – ie, citizens who have crossed the age of 60 who would need financial assistance in some form.
For average middle class families, retirement is never easy and with retirement there are many financial challenges that can arise when the regular income stops.
This is when Senior Savings Schemes can provide at least some level of comfort and basic income that helps you get through the remainder of your life in comfort.
Introduced in 2004 by the Government of India, Senior Citizen Savings Scheme (SCSS) aims to provide an assured return paid to seniro citizens as a regular source of income. Do note, this is paid quarterly and not monthly.
Table of Contents
Why should you invest in SCSS?
Everyone needs an income at all stages of adult life.
Investing in Senior Citizen Savings Scheme enables a safety net for senior citizens to esnure that there is some income for the rest of thier lives.
The advantage of Senior Citizen Savings Scheme is that it can be considered as a long term savings scheme with security of having your money secured with the government.
As with other government-based savings schemes, Senior Citizen Savings Scheme can be availed through post offices and nationalized/ certified banks which are available in every nook and corner of the country.
Eligibility for Senior Citizen Saving Scheme
Senior Citizen Savings Scheme has some eligibility criteria, which you need to know before investing your money.
- You should be a resident Indian.
- Minimum age requirement is 60 years
- An individual who has opted for VRS (Voluntary Retirement Scheme) or Superannuation for retirement within the age of 55-60 is eligible.
- In the above case, investment has to be made within 30 days of getting all retirement benefits.
- Retired defence personnel with a minimum age limit of 50 years.
- HUFs and NRIs are not eligible to invest in Senior Citizen Savings Scheme.
Investment Amount
Under Senior Citizen Savings Scheme, you can invest a maximum of INR 15 lakhs in multiples of 1NR 1000.
This can be done either as an individual or jointly.
Do note that amount invested in Senior Citizen Savings Scheme cannot exceed money which you recieved up on retirement.
You can either invest INR 15 Lakhs or amount recieved on retirement whichever is lower.
Benefits of investing in SCSS
1. Safety of Investment: As Senior Citizen Savings Scheme is backed by the government, it is considered relatively safe compared to other investments.
2.Easy to Start: Account opening process for Senior Citizen Savings Scheme is easy and you can open the account at a certified bank or post office in India. Your account can also be transferred anywhere in India.
3.Good returns: Compared to other investments, Senior Citizen Savings Scheme has a return rate of 7.4% which is good.
4. Nomination Facility: You can use nomination feature at the time of opening a Senior Citizen Savings Scheme account and ensure your savings gets passed on to someone in case of any unfortunate events.
5. Tax benefits: Any sum of money invested from April 2007, is eligible for for Tax deduction of up to Rs.1.5 lakh under Section 80C of the Indian Tax Act, 1961. However, do note, interest earned is taxable.
6. Flexible: Another feature of Senior Citizen Savings Scheme is that it is flexible and you can get your investment back with a penality when you urgently require your funds.
How to open an SCSS account
You can open an Senior Citizen Savings Scheme account by visiting a certified bank or the nearest post office. The process to open Senior Citizen Savings Scheme is as:
1. Visit any bank or post office.
2. Fill Form A fully
3. Submit the necessary documents
4. Provide age proof
Documents required to Apply for SCSS
- Identity proof like PAN card, Passport.
- Aadhaar Card
- Pan Card, Passport, Telephone bill/Electricity Bill, Voter ID
- Birth Certificate/ Senior Citizen Card
- 2 Passport sized photos.
These documents need to be self-attested.
Interest rate on SCSS Account
From the time Senior Citizen Savings Scheme was launched, the rate of interest has been higher than other investments.
This table will help you understand rate of interest offered by Senior Citizen Savings Scheme over the years.
| Period | Interest Rate |
| Till 2012 | 9% |
| 2012-13 | 9.3% |
| 2013-14 | 9.2% |
| 2014-15 | 9.2% |
| 2015-16 | 9.3% |
| 2016-17 | 8.5% |
| 2017-18 (Q1) | 8.4% |
| 2017-18 (Q2) | 8.3% |
| 2017-18 (Q3) | 8.3% |
| 2017-18 (Q4) | 8.3% |
| 2018-19 (Q1) | 8.3% |
| 2018-19 (Q2) | 8.3% |
| 2018-19 (Q3) | 8.7% |
| 2018-19 (Q4) | 8.7% |
| 2019-2020 (Q1) | 8.7% |
| 2019-2020 (Q2) | 8.6% |
| 2019-2020 (Q3) | 8.6% |
| 2019-2020 (Q4) | 8.6% |
| 2020-2021 (Q1) | 7.4% |
Senior Citizen Savings Scheme Calculator
As we mentioned earlier, Senior Citizen Savings Scheme interest is calculated quarterly and interest is paid on every quarter on the 1st day of April, July, October, and January.
Few factors considered for calcuating interest of Senior Citizen Savings Scheme are:
- The principal/deposit amount
- Rate of interest
- Maturity period
The maturity period of Senior Citizen Savings Scheme is fixed and other other two factors depend on the time you invest and the amount you are investing.
For ease of understanding we can look at a real world scenario of someone investing in Senior Citizen Savings Scheme.
Mr. Mehta opens an SCSS account and deposists Rs. 15 Lakh under SCSS on 1st July 2017. In the second quarter of the Financial Year 2017, the interest rate was 8.3%. Hence, the total interest he is eligible to earn at maturity is Rs. (1500000 * 8.3% * 5) or Rs. 6.2 Lakh.
Every month Mr. Mehta’s interest gets accumulated and is paid off every quarter. So for his investment in Senior Citizen Savings Scheme, Mr. Mehta’s total interest divided by the number of quarters in 5 years, i.e. 20, which is Rs. (620000/20) or Rs. 31,000.
At the time of maturity, his total earnings will be Deposit + interest which means Rs. (1500000 + 620000) or Rs. 21.2 Lakh
Banks applicable for SCSS Account
Here are some of the certified banks where you can open Senior Citizen Savings Scheme account.
- Allahabad Bank
- Andhra bank
- Bank of Maharashtra
- Bank of Baroda
- Bank of India
- Corporation Bank
- Canara Bank
- Central Bank of India
- Dena Bank
- IDBI Bank
- Indian Bank
- Indian Overseas Bank
- Punjab National Bank
- State Bank of India
- Syndicate Bank
- UCO Bank
- Union Bank of India
- Vijaya Bank
- ICICI Bank
Things to Remember when investing in Senior Citizen Savings Scheme
- You can transfer the account from one bank to another.
- You can transfer interest to savings bank account.
- You can always withdraw the amount from your SCSS scheme at a penalty.
- You cannot pledge deposit amount for taking a loan from SCSS scheme.
- Premature withdrawal or closure of the SCSS account is only allowed after completion of one year from the date of opening the account.
- There will be penalty for early withdrawal or closure. The penalty ranges from 1-1.5 per cent, depending on the completed tenure of the account and the rest of the amount will be credited back to you.
- If your Senior Citizen Savings Scheme account is closed after the first year and before the end of the second year, a sum equal to 1.5 per cent of the principal amount is deducted as penalty charge.
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