Senior Citizen Savings Scheme (SCSS) is a government-supported social security initiative allowing older people to earn higher interest rates on their small savings for retirement. The current SCSS rate is 8.2 percent, slightly higher than or the same as fixed deposits of some banks. Through a circular on November 9, 2023, the finance ministry announced two important decisions regarding the SCSS accounts. An individual can now open the account three months after receiving the retirement benefits or payments instead of one month. Also, SCSS Account Be Extended indefinitely by an individual after its five-year maturity period in a block of three years.

Individuals aged 60 and older and eligible retirees above 55 but less than 60 can open the account. The government has changed the norms for depositors’ ease in its new rules.

How SCSS Rule Change Will Benefit Subscribers

The extension of time for opening an SCSS account will provide people more time to complete the paperwork for retirement, like filing for pensions, ensuring receipt of retirement payments from the organization, and streamlining investments as per the change in the income status.

The government has also allowed the spouse of a central or state government employee to invest in the SCSS account of the primary accountholder if they die aged 50 or older. For instance, the spouse can invest the death compensation or the retirement benefits in the account, providing substantial financial relief with regular income to the survivors besides tax benefits.

Until now, SCSS allowed only one extension of three years after maturity for those who wanted extend their SCSS account. This rule has changed, and an individual can extend it indefinitely in a block of three years after maturity.

If the account is extended after maturity, it will earn an interest applicable at the time or date of the previous extension, unlike before, when the interest rate was applicable on the maturity date.
The government has also introduced a deduction for premature account closure. One percent of the deposits will be levied if the SCSS account is closed within a year from the extension date. Previously, there was no deduction from the deposit amount except on the interest paid in a year.

The Senior Citizen Savings Scheme is a “financial lifeline” for most seniors. It provides higher interest and helps them earn a living with their limited cash flows post-retirement from service. The SCSS scheme is one of the popular investment instruments for senior citizens besides fixed deposits and government securities that provide guaranteed returns.