Senior Citizen Savings Scheme, as the name suggests, is a dedicated investment plan for senior citizens above the age of 60 years. Before retirement, there are a number of investment options available for people to create a retirement corpus – Employee Provident Fund (EPF), Public Provident Fund (PPF), gratuity, and others. You also have the ability to withstand losses to your capital as you have some working years left for earning. So you can also look at equity investment and mutual funds to gain an advantage of the time value of money. However, once you have retired, there are not many options left. You will be wary of investing in the stock market as your risk bearing capacity has reduced and you will prefer the investment which gives medium to high returns with utmost stability.
Thus, the government of India has given a sovereign backing with Senior Citizen Savings Scheme (SCSS) to provide capital protection and periodic payout to new retirees.
Features of SCSS
You can avail Senior Citizen Saving Scheme benefits in India with this scheme. You will receive a high interest rate like 8.6% as per latest Small Saving Schemes interest rate announcements by the Ministry of Finance.
- The scheme requires you to invest a lump sum and pays quarterly interest. This is a non-cumulative scheme, and the idea is to bridge the gap between your last income and pension.
- New retirees between 55 – 60 years can also invest their EPF or PPF amount, provided they do it in one month of receiving the benefits.
- The maximum investable amount is Rs. 15 lakhs.
- The duration of the scheme is 5 years and is extendable to three years only once.
- Premature withdrawal is allowed with penalties.
- Withdrawal penalty is 1.5% between 1-2 years of investment.
- No charges on premature closure on account of death.
- The best feature is the tax-saving advantage under Section 80 C up to Rs. 1.5 lakhs in the financial year of lumpsum investment.
- The subsequent payouts you will receive will be non-taxable for TDS under Section TTB if the total interest does not exceed Rs. 50,000 in a financial year.
- You can also nominate someone for your account while filling the form or even later.
- Transfer of account between the bank and the post office is also possible. However, be clear that any credit in a post office account will go to post office savings account and any credit to SCSS in a bank will go to the bank account Only.
How to Invest Money in SCSS
The one question that intrigues many investors is – “how to invest money in this scheme?”. You can download the account opening form from the listed bank website or post office. If you are investing below Rs. 1 lakh, then even cash deposit can be made; otherwise, a cheque is required. Multiple accounts can be opened, but the investable amount in all the accounts cannot breach the Rs. 15 lakhs limit. You need the following documents while opening an SCSS account –
- PAN card copy
- Know Your Customer (KYC) document
- Photographs
- Address proof
- Age proof
- A letter/certificate from the company from which you have retired stating that the date of superannuation and benefits received
- Proof of date when benefits were disbursed
SCSS is a safe and well-paying scheme for senior citizens. However, once the duration for this is exhausted, you are left with little choice but to go back to fixed deposits. You can look at company FDs which provide equal and even higher interest rates as compared to SCSS. Bajaj Finance FD currently offers high interest rate of 8.95% for senior citizens. It is backed by high credit ratings from companies like CRISIL and ICRA with an assurance of timely repayment of principal and interest amount. You can choose to receive periodic interest payouts from non-cumulative Bajaj Finance FD to ensure a source of regular income post-retirement.
There are various other benefits which you can avail of to ease your investment process. For example, you can manage and track multiple FDs online using Experia- your online fixed deposit account. You can even raise a loan against FD when in need of urgent cash. Hassle-free premature withdrawal is also offered. Thus, Bajaj Finance Fixed Deposit (FD) is one of the best investment options for senior citizens looking to earn safe and assured returns post-retirement.