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How SCSS Works?


What is the best way you choose to save right now? Would it be the same way you save after your retirement or while you get a little older? It would not be practically possible. Why you may wonder. Well, the case is that – when you get older, you lose job stability, you are much closer to retirement, and most importantly, if you are a senior citizen (which is above 65 years of age), then you would have a lot more risk factors, cannot afford to lose money and also won’t have a very high income to start investing it.

This is exactly why senior citizens have a higher consideration when it comes to saving and investing. Whether that is having a savings account or opening an FD, you have tax benefits and higher interest rates. 

This piece is for all of you to know about senior citizen schemes and, most importantly, about the ‘senior citizen savings scheme.’

What is the Senior Citizen Savings Scheme?

For those over 60 – the Senior Citizen Savings Scheme (SCSS) is a popular fixed-income investment option. This program’s main goal is to assist seniors in securing a steady income after retirement. Because SCSS is a government-backed investment program, it offers quarterly returns that are guaranteed. In India – accredited banks and post offices provide the Senior Citizen Savings Scheme.

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How Does the Senior Citizen Saving Scheme Work?

Here is exactly how the SCSS scheme works:

  • Depositing a minimum of 1,000 up to 15 lakh in a single installment will open an SCSS account.
  • The deposit needs to be made in the SCSS account within a month of the date where the retirement benefits were received from the employer, and the deposit amount is limited to the retirement benefits received.
  • Retirement benefits, whether from superannuation or another source, refer to any money payable to the account holder as a result of retirement. The following are included in this category: contributions to a provident fund, retirement or superannuation gratuity, commuted value of a pension, leave encashment, savings component of a group savings linked insurance plan paid by the employer upon retirement, retirement-cum-withdrawal benefit under the Employees’ Family Pension Scheme, and ex-gratia payments made under a voluntary or special voluntary retirement plan.
  • The excess funds must be immediately returned to the account holder if the deposit exceeds the ceiling amount.
  • The interest on the deposit shall be paid quarterly.
  • Into the savings account at the aforementioned Post Office branch, interest may be withdrawn via ECS or auto credit.
  • The account may be prematurely closed at any time after the opening date.
  • The account may be kept open for an additional three years after it achieves maturity.
  • A request for an extension must be made within a calendar year of the maturity date.

Who Can Start Saving Up With This Scheme?

An Indian national who resides in the nation and is 60 years of age or older may apply for SCSS. Age eligibility is 55 years of age or older but less than 60 years for those who have retired on superannuation or under the VRS, provided that the account is started within one month of receiving retirement benefits and that the investment amount does not exceed that amount.

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Under the age of 50, retired members of the armed forces, except civilian defense employees, may open an SCSS. NRIs (non-resident Indians) are not permitted to choose the SCSS.

How Many Returns Do You Get From this Scheme?

The SCSS interest rate at the moment is 7.4% p.a. When compared to savings and fixed deposit (FD) accounts, the SCSS offers substantial returns. Interest is due on March 31, June 30, September 30, and December 31 in the first instance and on the deposit dates of March 31, September 30, and December 31 thereafter.

On the first working day of the months – April, July, October, and January, interest is paid in quarters. However, only post offices with Core Banking capabilities can receive quarterly interest payments.

Can You Close Off the Account Earlier?

Before the five-year maturity term, the SCSS account may be prematurely closed. The account holder receives his main deposit and no interest if the account is closed before one year has passed since it was opened.

A deduction equal to 1.5% of the deposit is made if the account is closed early after one year of investing but before two years have passed. A 1% penalty on the deposit is applied to accounts closed on or after the two-year mark.

Closing your SCSS Account

An SCSS account matures five years after the account’s establishment.

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Within one year of the account’s maturity it may be expanded for another three years. In these situations, the account may be canceled at any time after the one-year extension has expired without incurring any fees.

An individual is qualified to earn interest at the rate applicable to a basic savings account of the bank that started the account if they do not extend their account past maturity but keep their investment amount in their SCSS account.

The account is closed, and the deposit is returned to the nominee with interest accrued up until the date of the account holder’s death in the event of death before maturity or delayed maturity.

How to Start Off With One?

An authorized bank or post office branch are the two places where an SCSS account can be opened.

The majority of government banks provide SCSS, and customers must physically visit the bank branch to provide the necessary information for the account.

The interest accrued on the plan is immediately credited to the savings account the bank opens for the plan, which can, upon request, be linked to another savings account.

Depositors who open SCSS accounts through the Indian Post Office may download the account opening form online, but they must still physically visit the location to deposit it.

The savings account that the post office opens for the depositor serves as the conduit for interest and deposit activities.


The older you get – the more you start thinking wiser about your money. This is a great way to get started, and you know there is lesser risk and more guarantee.

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