Senior Citizen Savings Scheme (SCSS): Interest Rate, Eligibility, Benefits and Calculation

Senior Citizen Savings Scheme (SCSS) is a government-sponsored savings scheme for senior citizens, which was launched in 2004. The primary objective of the scheme is to enable senior citizens to ensure a regular flow of income.

The scheme offers guaranteed interest payment, which can be received on a quarterly basis. As this scheme is solely a government-run scheme, so the interest rate and other conditions have been set keeping in mind the financial needs of retirees.

Eligibility For SCSS Scheme

For those looking to avail the benefits of this scheme, here are the eligibility criteria:

  • An individual must be a citizen of India. Non-residential Indians (NRIs) or a person of Indian origin (PIOs) are not eligible to avail this feature. Also, Hindu Undivided Family (HUFs) do not qualify for this scheme.
  • As this is a senior citizen savings scheme, so any resident of India aged 60 years or above is eligible for this scheme. However, there are few exceptions to the age bar:
    a. Retirees in the age group of 55-60 years who have opted for Voluntary Retirement Scheme (VRS) or Superannuation are eligible to avail the scheme if they apply for the same within one month of gaining their retirement perks.
    b. Retired defence personnel can avail this scheme irrespective of their age, provided they fulfil all other conditions.
  • This scheme can be availed with a minimum deposit amount of Rs. 1000.

Benefits of Senior Citizen Savings Scheme (SCSS)

As a government-run scheme, the Senior Citizen Savings Scheme (SCSS) offers safety and guarantee of your investment. Here’s a look at some other benefits of investing in this scheme:

  • It offers reasonable returns on your investment.
  • It is extremely easy to open, operate, and transfer SCSS account at any authorized bank or post office in India.
  • It offers the flexibility to extend tenure. You can start with a tenure of five years, and after its maturity, you may extend it up to three more years. However, the tenure can be extended only once..

You can calculate the SCSS interest rate easily, by computing the compound interest on deposit amount as per the SCSS interest rate for that quarter. The payment is released annually to the savings account of the account holder.

Limitations of Senior Citizens Savings Schemes

While the Senior Citizen Savings Scheme can be a great option for those above 60 years of age, there are a few limitations of this scheme as well. Here’s a look at some of its limitations below:

  • Limited tenure: This scheme is limited to five years. Only a one-time extension up to three years is possible. So, you cannot invest in it beyond eight years.
  • Tax deduction: Income tax is deducted on the interest earned. This decreases your overall earnings.
  • Cap on investment amount: You can invest a maximum of INR 15 lakh (individually or jointly) in SCSS account. Also, your investment can’t exceed the amount you receive on your retirement.
  • Penalty on premature withdrawal: You can also close your SCSS account at any time with minimal penalty charges.

What makes Fixed Deposit a better investment option?

For senior citizens looking for high, stable returns on their investments, another good investment option is Fixed Deposit. Unlike SCSS, investing in a Fixed Deposit can offer higher flexibility in terms of investment amount, tenure and guidelines for premature withdrawal. Here’s a look at factors that make investing in a Fixed Deposit a better option than SCSS:

High returns for senior citizens

Senior Citizen Fixed Deposit from Bajaj Finance offer an attractive interest rate. The interest rate offered is as high as 7.35%, and there is an additional benefit of 0.10% on renewals. No other fixed income investment (including SCSS) offers such a high interest rate.

Flexible tenure

You can choose the tenure as per your needs. Bajaj Finance offers flexible tenure in the range of 12 months to 60 months. Senior citizens can protect their investment against inflation by opting for shorter tenures. Also, you can renew your FD upon maturity of your deposit. There is no limit on the number of renewals.

Periodic interest payouts

Senior citizens can avail periodic interest payouts with Bajaj Finance FD to meet their regular monthly expenses. You can choose monthly, quarterly, or annual payouts.

FD calculator

Senior citizens can calculate the maturity amount of their FD investments with online FD calculator. This leaves no room for any confusion or ambiguity.

Easy access

Financiers like Bajaj Finance offers the ease of investing in a Fixed Deposit online from the comfort of your home. For senior citizens looking to invest offline, Bajaj Finance provides the facility of doorstep document pick-up at no additional cost.

Comparison between Bajaj Finance Fixed Deposit and Senior Citizen Savings Scheme (SCSS):

Features Bajaj Finance Fixed Deposit SCSS
Interest rate 7.35% 7.4% (current rate for the 2nd quarter of FY 2020-21)
Tenure Flexible ranging from 12 months to 60 months. Fixed at 5 years with a one-time extension up to 3 years
Eligibility It is also available for Hindu Undivided family It is not available for HUF
Interest payout frequency Flexible Annually
Loan facility Loan against FD available Loan facility not available