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Senior Citizen Savings Scheme

In the lives of many senior citizens retirement is associated with troubles. For a trouble free retirement it is essential to invest in savings schemes like senior citizen savings scheme. It is a government initiated safe scheme that guarantees essential funds at the time of retirement. Here are more details regarding the scheme.

Who is Eligible to Enroll in the Scheme?

An Indian citizen who is 60 years old or above or has voluntarily retired at the age of 55 years is eligible to invest under the scheme. Even people retired from defensive services can also save under the scheme but with additional restrictions.

Where to Subscribe?

The scheme is available for eligible Indian citizens at any post-office and certain nationalized banks like Bank of Baroda, UCO, ICICI, State bank of India, Allahabad bank etc. After opening the account at a particular branch it can be transferred to another branch without any hassles.

Subscribing for the Scheme

One can enroll for the scheme with an individual account or under a joint account along with the spouse. Minimum amount that can be invested is 1000 Rs and can be increased up to a maximum limit of 15, 00,000 Rs. One or more nominees can also be included along with the account holder. Nomination can be done either at the time of subscribing for the scheme or earlier and can be changed with the consent of the account holder at any time. Nominee will obtain ownership of the money after the death of the account holder. The scheme can be opened for a period of five years and can be extended further for three years.

Interest Rates

Currently, interest rate of 9.3% is being offered annually. Interest rate is paid once in every three months on 31st March, 30th June, 30th September and 31st December. Any changes in interest rates are intimated by government before 1st April every year.

Advantages of Senior Citizen Savings Scheme

  • Risk free. Capital amount is assured as it is a government managed scheme.
  • Remains unaffected by inflation. Even when the inflation falls below 9.3% the actual rate of returns will be paid. When the inflation rises above 9.3% there will not be any additional interest payment.
  • Capital amount can be withdrawn at any time before maturity after one year of opening the account by paying certain amount of penalty. Penalty would be 1.5% of the deposited amount if the account is closed after one year before completing the second year. After completing the second year, account can be closed at any time by paying 1% of deposited amount as penalty.
  • The amount invested in the scheme is deductible from Income tax. However, the interest obtained on the deposited amount is liable to income tax. Citizens without taxable income can obtain tax redemption by submitting essential forms like 15G.
  • Loan can be obtained on the deposited amount by guaranteeing to repay the loan.

Lastly, senior citizen savings scheme is a safe savings scheme for senior citizens and assures regular income.

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