Out of 365 days in a year, finally, a day to celebrate the achievement and contribution of Senior Citizens is here. Knowing about the avenues where your family’s senior citizen members can park their money to live a happy life will also be beneficial for you. Today is Senior Citizens’ Day and on this occasion, let us look at what are the avenues for savings for the elderly.
Senior Citizens Savings Scheme (SCSS) is a government-backed savings instrument offered to Indian residents aged over 60 years. The deposit matures after five years from the date of commencement of the scheme. It can also be extended once for an additional three years. As of July 2019, the interest rate available on the SCSS is 8.6 per cent, per annum for the July to September 2019 quarter. This rate of interest is reviewed quarterly by the Ministry of Finance and is subject to periodic changes.
Being a government-backed savings instrument, the terms and conditions applicable to the SCSS are the same, regardless of the bank or post office you invest through.
The minimum deposit limit is of Rs.1000 while the maximum deposit limit in the scheme is Rs.15 lakh.
Deposits made into the SCSS mature after five years calculated from the date of account opening. However, the account holder has the option of extending the account for an additional three years after its maturity. This extension option is currently available just once and the extension request has to be made within one year of maturity of the SCSS account.
Premature withdrawal of Senior Citizen’s Savings Scheme is allowed but penalties are applicable in such cases based on the time elapsed between account opening and withdrawal. The penalties on premature exit from SCSS are as follows:
1. 1.5 per cent of deposit amount deducted as a penalty if an exit from the scheme occurs before completion of 2 years from the date of account opening.
2. One per cent of SCSS deposit deducted as a penalty if an exit from the scheme occurs between 2 years to less than 5 years from the date of account opening.