Senior Citizen Saving Scheme

20 Dec

In continuation to the Post Office Monthly Savings Scheme (PO MIS) in the previous article, here we will describe the Senior Citizen Saving Scheme. The content of this article revolves around the benefits of this scheme over others meant for senior citizens.

Requirements of senior citizens: As one approaches the retirement age he/she looks for a safe investment scheme that offers regular monthly income. The aspects desired are capital appreciation coupled with security.

The one to become the most popular was Senior Citizen Saving Scheme (SCSS). This scheme was announced by Government of India in 2004 in order to cater to the needs of senior citizens.

Details of SCSS

Returns: 9% p.a. paid quarterly
Investment limits:

o The lower investment is Rs 1,000.

o The upper limit is Rs 15 lakhs.

Duration: The tenure of PO MIS is 6 years.
Eligibility:

o A person of 60 years or above

o A person of 55 years who has opted for Voluntary Retirement Scheme subject to certain conditions

o No age limit for retired personnel of Defence services

Premature withdrawal, encashment, closure & Penalty: Premature withdrawal of the invested amount is allowed after 1 year of opening the account. In case the account is to be closed between 1 and 2 years of opening, 1.5% of the deposited amount is deducted as penalty and if closed after 2 years of opening, the penalty is 1% of the deposited amount.

Shortcoming of SCSS: Interest earned on this scheme is taxable. If the interest income in a year is more than Rs 10,000, then the TDS (tax deducted at source) is cut.

Benefits of PO MIS over SCSS: Bonus of 5% on principal amount is paid under MIS at the time of maturity.

Conclusion: It can be said that both the schemes PO MIS and SCSS offer safety, liquidity and regular periodic income without much difference in the proceeds. Therefore, both are suitable for senior citizens depending on the desired time period (monthly/quarterly).