Last week, the government allowed an indefinite extension of the Senior Citizens Savings Scheme (SCSS) to ensure continued financial support for older people. The finance ministry’s November 9 notification has also extended the timeframe to open the SCSS account from one month to three months from the date of receiving their retirement benefits or payment disbursal.

Those aged above 60 can open the SCSS account. Retirees above 55 and less than 60 who are otherwise eligible can also open the account. In the latest guidelines, the norms for the scheme have been changed for depositors’ ease. Let us explore the latest changes.   

1. The time extension for opening an SCSS account would benefit seniors who have to take care of formalities like filing for a pension, securing retirement benefits, and investments in instruments such as fixed deposits, SCSS, etc. It will allow seniors to plan without rushing.

2. As per the new rule, the spouse of the government employees, both central and state government, can invest in the scheme if the employee who is 50 years or older dies. In this case, the spouse can invest the retirement benefits and the death compensation in the SCSS account, providing financial relief to the surviving members. SCSS offers tax benefits and higher interest rates.

3. Currently, SCSS allows extension only once for three years. It will now allow extension in a block of every three years indefinitely, which can be extended within a year from the date of maturity. This government-backed scheme pays quarterly interest. If the account is extended after maturity, which is five years, it will earn interest applicable at the time or the date of the previous extension. Earlier, it was only the interest rate applicable on the maturity date.

4. Other changes include a deduction on the premature account closure. If the account is closed within a year from the extension date, one per cent of the deposit amount will be levied. Earlier, there was no deduction from the deposit amount but on the interest amount paid in a year.

Besides SCSS, the National Savings Time Deposit scheme has also undergone some changes in the interest payment. As per the existing rules, if a withdrawal is made after four years but before its five-year maturity, the accountholder will earn an interest applicable for a three-year term deposit. After the latest changes, the account holder would get the same interest rate as a post office savings account if the deposit is withdrawn after four years but before maturity.