Savings scheme

Explained: Current withdrawal rules for the Savings Plan for Seniors (SCSS)

Planning

oi-Vipul Das

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Senior Citizens Savings Scheme is a large, small savings program for seniors, with a current interest rate of 7.4 percent per year. The SCSS, which has a maturity of five years, allows them to have a stable income at retirement age. A natural person must be at least 60 years old to open a Seniors Savings Plan account. A natural person aged 55 or over but under the age of 60 who has retired on the retirement pension or under VRS can also open the account. Several accounts, subject to a cumulative investment limit of Rs15 lakh, can be opened at any post office. The account can be extended in blocks of three years after its expiration by submitting a predefined form accompanied by the passbook to the post office concerned. However, within one year of maturity, the account may be extended. At any time after the account opening date, the account may be closed prematurely. Read the following facts to learn more about SCSS opt-out rules.

1. A Seniors Savings account can be closed early if it has been open for more than a year. However, the interest on the deposit will be recovered and the remaining balance will be returned to the individual.

2. If the Seniors Savings Plan account is closed within one year and two years after its opening, 1.5% of the deposit will be withheld and the remaining balance will be credited to the individual.

3. If the account is closed after two years but within five years from the date of opening, 1% of the principal will be withheld and the amount will be credited to the account holder.

4. In the event that a Senior Savings Plan account has been extended once, the account holder may close the account without penalty after one year from the date of extension.

5. If a depositor of the Senior Savings Plan dies before the maturity of the account, the account will be terminated and the balance will be reimbursed, including interest at the SCSS rate before the date of death and at the interest rate of the savings account. (currently 4%) before the final closure of the account.

6. If the spouse is the sole representative in the case of a joint account, the spouse can maintain the account if they meet the eligibility conditions of the plan on the date of the death of the main account holder.

7. If one of the spouses has opened one or more new accounts under this plan and one of the spouses dies while the account (s) are active, the name of the account (s) kept by the deceased owner will be terminated.

8. In the event that the depositor does not close or extend the account (i.e. within one year of the account opening date but before the 5-year maturity period) by requesting a period three years, the account will be classified as matured and after maturity. the amount of interest at the rate in effect at a postal savings deposit will only be payable for the period beyond the due date but before the account is closed.

Article first published: Tuesday March 9, 2021, 4:53 PM [IST]


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