Senior Citizens’ Savings Scheme (SCSS): A Secure Retirement Income Option

For many retirees, preserving capital while earning a reliable interest income is a top priority. The Senior Citizens’ Savings Scheme (SCSS): a Government of India backed small savings product delivers one of the highest fixed interest rates available to individual investors aged 60 and above.

What is SCSS?

SCSS is a five-year deposit scheme designed exclusively for senior citizens and certain government retirees. Depositors park their retirement corpus and receive quarterly interest payouts at a guaranteed rate.

• Current Interest Rate: 8.20% per annum (Q2 FY 2025-26), higher than bank FDs.
• Tenure: 5 years, with a one-time extension of 3 years allowed
• Payout Frequency: Quarterly interest credited to your savings or linked bank account

Key Features and Benefits

1. High Guaranteed Returns
   SCSS offers one of the highest fixed rates in the small-savings and bank-term-deposit universe, ensuring steady income.
2. Quarterly Interest Payouts
   Interest is credited every quarter, matching regular expense cycles for healthcare, utilities, and day-to-day needs.
3. Tax Benefits
   Contributions up to Rs. 1.5 lakh are eligible for tax deduction under Section 80C of the Income Tax Act. Not applicable for New Tax Regime
4. Safety and Trust
   Backed by the central government, your principal and interest are fully guaranteed.
5. Partial Withdrawals
   After one year, you may make partial withdrawals up to 50% of the deposit amount once during the first three years, subject to conditions.

Eligibility and Deposit Limits

• Who can Invest?
  • Resident Indian citizens aged 60 or above
  • Retirees aged 55–60 who deposit their provident fund or gratuity proceeds within one month of receipt
  • Individuals aged 55–60 who have retired on medical grounds and deposit within one month of receipt
• Investment Ceiling:
  • Minimum deposit: Rs. 1,000 (multiples of Rs. 1,000)
  • Maximum deposit: Rs. 30 lakh per individual (joint accounts not permitted)

Interest Calculation and Payout

• Rate: 8.20% p.a., locked in at the time of deposit
• Credit Dates: June 30, September 30, December 31, and March 31
• Compounding: Interest is calculated on the deposit amount and paid out quarterly; it does not compound in the account.

How to Open an SCSS Account?

1. Choose Your Institution: SCSS is available at post offices and most scheduled commercial banks.
2. Documentation: Submit a completed SCSS application form along with:
   • Proof of age (Aadhaar, PAN, passport)
   • KYC documents (address proof, identity proof)
   • Bank account details for interest credit
3. Deposit Funds: Pay via cheque, cash (up to Rs. 50,000), or direct transfer, within the prescribed deposit limits.

Premature Withdrawal and Extension

• Premature Withdrawal:
  • Allowed after one year, subject to a penalty of 1.5% on the deposit rate if withdrawn before two years, and 1% if withdrawn after two years but before maturity.
• Extension:
  • After the initial five-year term, you can extend the deposit by an additional three years. The applicable interest rate will be the rate prevailing at the time of extension.

Pros and Cons

Summary:

For conservative investors and retirees looking for high, guaranteed returns with capital safety and tax benefits, SCSS remains one of the most compelling choices in India’s savings landscape. With quarterly payouts aligned to expense cycles and the security of government backing, SCSS provides a reliable foundation for post-retirement financial planning.

Regards,

Honvest Team.