The Senior Citizens Savings Scheme (SCSS) offers a rate of interest that is higher than all other guaranteed-income instruments in the market. Right now, it offers an annual rate of 8.2%, just 50 basis points below the high of 8.7% that was offered between Q3 of FY19 and Q1 of FY20.
SCSS interest rate, sovereign guarantee
A relatively higher interest rate and a sovereign guarantee, both are high on the agenda when a person moves beyond 60 – financially the most vulnerable age for an average individual.
The interest comes up for revision once every quarter by the finance ministry.
Maximum investment in SCSS
The SCSS pays interest once every quarter. The maximum amount that one can invest in an SCSS account is Rs 30 lakh.
A person can keep an SCSS account running for 8 years. Its maturity period is 5 years which can be extended for 3 years. Also remember, extension is granted only once.
Therefore, the term effectively becomes 8 years.
SCSS calculator
Let’s see how much interest it will fetch you in 5 years and 8 years. If you invest Rs 30 lakh every three months an interest of Rs 61,500 will accrue to your account, which means Rs 246,000 a year.
You can also think of it as a monthly cash flow of Rs 20,500.
Therefore, Rs 30 lakh in the SCSS account will fetch you Rs 12.30 lakh in five years, the maturity period of the instrument.
Stretch it to 8 years and you would be receiving a nominal cumulative cash flow of close to Rs 20 lakh – Rs 19.68 lakh.
Cannot open online
An important point to remember is that one cannot open an SCSS account online. Anyone desirous of opening an account has to visit a post office or the branch of a designated bank and provide the required KYC information in a prescribed form. Since the instrument is only for those above 60 years, the age proof is of vital importance. Proof of address and identity such as Aadhaar and a cheque to start the account with have to be submitted too.
The Senior Citizens Savings Scheme was launched in 2004 to offer a preferential interest income in the golden years of life. It has become an extremely popular source of assured income for people. Personal Finance Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
