Senior Citizen Savings Scheme: SCSS gives 8.6% returns without any risk, say tax and investment experts

After getting retired a senior citizen doesn't have the option to earn but as it is said 'if you are sitting, it's good but your money shouldn't remain idle' and hence the investment experts recommend that they keep investing. Those who believe in investing without taking any risk, but want better returns than bank FDs, then Senior Citizen Savings Scheme (SCSS) is a great option, suggest investment experts. They say it gives 8.6 per cent returns and is free from any kind of risk exposure.

Speaking on the SCSS Balwant Jain, a Mumbai-based tax and investment expert said, "If you have retired on superannuation or have taken voluntary retirement, you can also invest under this scheme provided you have completed 55 years of age at the time of opening the account. The age limit does not apply to the retired personnel of the defence services. In either of the case, the account under SCSS has to be opened within one month from the receipt of retirement money with proof of disbursal. Only the money received as retirement benefits under the terms of such retirement can be invested under this scheme." 
He said that initial tenure of the account opened under SCSS is five years but can be extended for once for another period of three years. Deposits made under SCSS can only be withdrawn after completion of one year and that too with a penalty. A penalty of 1.50 per cent of the deposit amount is levied if you close the account after one year but before completion of two years. The amount of penalty comes down to 1 per cent for accounts closed after two years. The deposits under extended account can be withdrawn any time after one year without any penalty. As deposits under SCSS cannot be withdrawn within one year, you should assess your liquidity requirement for the next year before making deposits under SCSS.

On investments that an investor in the SCSS can do, Balwant Jain said, "One can deposit only up to Rs 15 lakh under this scheme either by opening a single or a joint account. Since for determining the eligibility to open the account under this scheme the age of the first holder is only considered, the spouse can be added as joint holder even if he/she has not completed the required age. The deposits within the overall limit can be made either in one single account or in multiple accounts."

Speaking on the return that one can expect in SCSS Kartik Jhaveri, Director — Wealth Management at Transcend Consultants said, "Senior Citizen Saving Schemes are hundred per cent risk-free and one can get an assured 8.6 per cent return in this investment." He said that interest paid under the scheme is paid quarterly and its rate of interest is also decided by the government on a quarterly basis. An account holder can open an SCSS account either in the post office or in a bank. The account can be an individual or a joint account with a spouse. but, in case of a joint SCSS account, the age of the first holder would be the final one. If the spouse age is less than 55 years, even then she can be a joint holder but husband's age should be minimum of 55 years and he should be the first holder.