After retirement, individuals look for investing in a senior citizen Fixed Deposit as it provides more interests and comes with variable tenures. Some go for Senior Citizens Savings Scheme (SCSS), a variant of Fixed Deposits that comes with more benefits and features.
Started back in 2004, SCSS is considered as one of the best investment plan for those looking for a short-term investment. The prime motive behind introduction of the SCSS by the Government of India was to ensure that senior citizens get continual and guaranteed flow of income.
SCSS deliver more rates of interest than Fixed Deposit long term or short term revised quarterly by the government. However, the rates will remain fixed for an individual for the course of the investment tenure.
The following outlines Senior Citizens Savings Scheme in detail:
1. Eligibility
An individual needs to attain an age of 60 years or above to open a Senior Citizens Savings Scheme SCSS account. Further, you can also open an account if you have attained the age of 55 years but less than 60 years and retired on superannuation or other reasons prior to the account opening date.
The government also made it possible for those that have retired before the implication of these rules to open such an account. In addition, these eligibility rules don’t conform to ex-servicemen.
NRIs (Non-Resident Indians) and HUF (Hindu Undivided Family) are not eligible for SCSS.
On the other hand, when it comes to Fixed Deposits, NBFCs like Bajaj Finserv provide both long-term and short-term FDs to HUF.
2. Deposits and Tenure
Individuals can deposit only on time in multiples of thousand rupees which shall not exceed Rs.15 Lakh.
The senior citizen FD amount will be locked-in for 5 years. Thus, an SCSS account differs from monthly income plan Fixed Deposit in this regard. Upon maturity, one can extend the tenure to another 3 years.
3. Premature Withdrawals
Senior citizens can withdraw the deposited amount only after 1 year, but that too with a penalty.
4. Mode of Deposit
The mode of deposit for SCSS account is quite similar to a senior citizen FD account; one needs to pay by cash if the amount is below Rs.1 Lakh. If more than that, then he/she can draw a cheque or demand draft in favour of the deposit and endorsed by the deposit office.
5. Rates of Interest
Banks can provide rates of interest up to 8.60% and so, SCSS is considered a best investment plan for senior citizens.
Banks provide interest at the end of each quarter i.e. 31st March, 30th June, 30th September, and 31st December.
6. Nomination
An account holder may nominate one person at the time of account opening or at any time before its closure. The account holder may cancel or change the nominee at any time.
In case of a joint account, both of the individuals need to be a senior citizen.
7. Account Closure
Upon the end of 5 years, an account holder shall close the SCSS account. If an individual does not close his/her account or extend it, he/she may close it at any time in the future.
The bank, upon maturity, will provide interest rates to the SCSS account as applicable in a Post Office Savings Accounts thus, making it another reason for being the best investment plan.
8. Death of Depositor
Under instances of a depositor’s death, the account will be closed and the amount along with interest will be transferred to the nominee or his/her legal heirs.
9. Premature Account Closure
Banks will charge 1.5% on the amount if the depositor closes his/her account after 1 year but before 2 years. On the other hand, banks will charge 1% if the depositor closes his/her account after 2 years.
Although a type of Senior Citizen Fixed Deposit, SCSS is the best investment plan for senior citizens in India.
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