Seniors Savings Plan: Advantages, functionalities – All you need to know

The Seniors Savings Plan is one of the most popular investment options for people over the age of 60. People after retirement typically look for places to keep their savings safe, while still getting a moderate rate of return. SCSS offers investors both: maximum security, as well as a steady stream of income and tax benefits.

How is it different from other investment options?

Although other investment options like mutual funds also offer a high return, but these are relatively high risk investments. SCSS, on the other hand, is a low risk, fixed return investment similar to bank, PMVVY and postal FDs.

But, unlike bank FDs, the Seniors Savings Plan is known to be more secure because it is a government backed savings plan and the investments are owned by the government. Although the plan has a 5-year term, it can be extended for 3 years.

Here are some things you should know about SCSS before you start investing:

People over 60 can open the SCSS account. However, pensioners or VRS retirees aged 55 but under 60 can also open an account, since the account is opened within one month of receiving the pension benefits and the amount of the deposit must not exceed the amount of the retirement pension.

The minimum amount for opening a SCSS account and the maximum balance are set at Rs 1,000 and Rs 15 lakh, respectively. An individual can also select an appointment both at the time of opening the account or even after opening the account.

SCSS offers interest rates of 8.6% per annum from March 31 / September 30 / December 31. Interest is automatically credited to the depositor’s savings account at the same post office and can be withdrawn via PDCs or money orders.

Investors can manage more than one account either by themselves or jointly with their spouse. Note that the joint account can be opened with a spouse and that the first depositor in the joint account is the investor. These accounts can also be transferred from one post office to another.

You can prematurely close your SCSS account, but if this is done within one year, a 5 percent deduction from the deposit amount will be made and after 2 years 1 percent of the deposit is deducted. Withholding tax (TDS) will be deducted from interest, if the amount of interest is greater than Rs 10,000 per year. Investors can also benefit from section 80C of the Income Tax Act 1961 when making investments under this scheme.