Post-retirement people look for investment avenues to park their retirement corpus in.

Usually, people don’t want to invest their retirement corpus in equities, which involves capital loss risk, or in products which have a long lock-in period and don’t offer any income till maturity.

Retirees are looking for products which are less risky and a product which can also minimize the tax outgo, which is when Senior Citizens Savings Scheme (SCSS) comes to rescue.

The Senior Citizens Savings Scheme (SCSS) is mainly for the senior citizens of India. The scheme offers a regular stream of income with the highest safety and tax saving benefits.

It is a suitable choice of investment for those over 60 years of age.

Who Can Invest in SCSS?

Any individual who is 60 years and above can invest in it.

Early retirees between the age of 55 and 60 years, who either opted for the voluntary retirement scheme (VRS) or superannuation, can also invest in the savings scheme, given the investment is done within a month of receiving the retirement benefits.

Also, retired defense personnel are allowed to invest in SCSS at the age of 50.

However, the scheme does not allow investment from the Hindu Undivided Family (HUF) and Non-Resident Indians (NRI).

How Much Can One Invest?

An individual can invest a maximum amount of Rs.15 lakhs in the SCSS account, individually or jointly (in multiples of Rs 1,000 only).

The amount endowed within the scheme cannot exceed the cash that has been received on retirement. Therefore, a person can invest either Rs.15 lakhs or the amount received as a retirement benefit, whichever is lower.

How to Open an SCSS Account?

An SCSS account can be opened in any of the authorized banks or post office branch across India with the following documents:

1. Form A has to be filled for opening an SCSS Account.

2.Identity proof like PAN card, Passport to be presented.

3. Address proof such as Telephone bill, Aadhar card is mandated.

4. Age Proof Document is required. This could within the type of a Passport, Senior Citizen Card, a Birth certificate issued by the Corporation or registrar of births and death, Voter ID card, PAN card etc.

5. 2 Passport size photographs.

All the above documents must be self-attested.

Interest rates offered under SCSS

Effectively, 1 October 2018 rate for the saving scheme is 8.7% p.a.

The interest rates offered on the saving schemes are reviewed every quarter by the Ministry of Finance. However, the interest payable on an investment made is locked on the date of the investment and does not change even if the rate on the scheme is revised later.

Following are the past interest rates of the SCSS account:

Time Period Interest rates (% annually)
Jan to March 2019    (Q4 FY 2018-19) 8.7
Oct to Dec 2018        (Q3 FY 2018-19) 8.7
Jul to Sep 2018         (Q2 FY 2018-19) 8.3
Apr to Jun 2018        (Q1 FY 2018-19) 8.3
Jan to March 2018    (Q4 FY 2017-18) 8.3
Oct to Dec 2017        (Q3 FY 2017-18) 8.3
Jul to Sep 2017         (Q2 FY 2017-18) 8.3
Apr to Jun 2017        (Q1 FY 2017-18) 8.4

Features Of The Scheme

These are the 5 main features of the scheme:

1.Number of Accounts

There is no specified limit on the number of accounts that can be opened, but the total amount in all the accounts must not breach the maximum investment.

2. Proof of Investment

The passbook should have all the details like the date of opening, the account number, the depositor’s name, photograph, and address, the amount deposited, dates and amount of the quarterly interest payable, maturity date and amount, nomination details, etc.

3. Tenure

The tenure of the scheme is 5 years, which can be further extended for 3 more years. Premature withdrawals are allowed, but only after completion of 1 year with premature withdrawal charges applicable.

4. Maturity

If the depositor wishes to close the account after the completion of 5 years and receive the maturity amount then he needs to submit the duly filled ‘Closure Form’, along with the passbook.

5. Taxation

Investment in SCSS entitles for deduction under Section 80C of the Income Tax Act. However, this benefit on tax is under the overall current ceiling of Rs. 1.5 lakhs p.a fixed for all investments under Section 80C.

Other Facilities Available Under SCSS

1.A nomination facility is made available for SCSS account holders. The nominee appointed by the depositor can be a minor too. The minor needs to provide the guardian’s details, along with the minor’s date of birth.

2.If the nomination is not made at the time of opening of the account, it can be done later during the scheme tenure by submitting the duly filled nomination form by the depositor.

If the account is held jointly, the nomination form should be signed by all the account holders.

3.The depositor can change the nominee multiple times as there is no limit prescribed for the facility. This facility is available free of cost.

Conclusion

All in all, SCSS being a government-backed scheme is completely risk-free and provides with superior returns i.e. 8.7% p.a. to a senior citizen who wants to invest their retirement corpus.

The scheme also has an easy availability as it can be availed through India Post Offices or designated bank branches located across the country.

Happy Investing!

Disclaimer: The views expressed in this post are that of the author and n