This is probably the best thing that you can do for your parents – tell them about SCSS!
SCSS means Senior Citizen Savings Scheme. It is a government-backed savings scheme where principal and interest are backed by the government. So there is a sovereign guarantee for your investments under this scheme.
In this article, we take a look at key features of this scheme to help you understand why you should introduce your parents to it.
Let’s start with account opening. An SCSS account can be opened in a post office or a scheduled commercial bank.
Who can open an SCSS account?
– An individual who has attained the age of 60 years and above
– An individual who has attained the age of 55 years or more but less than 60 years and who has retired on superannuation or otherwise.
– The spouse of the government employee, if the employee has attained the age of 50 years and has died while in service.
The minimum investment allowed under SCSS is Rs 1,000 while the maximum investment per person is Rs 30 lakh.
While a single person can have multiple SCSS accounts, the sum total of investments in all such accounts should not exceed Rs 30 lakh. Any amount above Rs 30 lakh will not earn the higher interest rate offered under this scheme.
Interestingly, senior citizen couples can have separate SCSS accounts, meaning you can ask your mom and dad to open their separate SCSS accounts and deposit up to Rs 30 lakh in each account.
The SCSS account matures in five years. But the icing on the cake is that it can be extended for another 3 years after maturity. The application for extension is required to be made within a period of one year from the date of maturity.
You should also tell your parents that an SCSS account can be opened in a single name or joint name. However, having a separate account is recommended if your parents have more than Rs 30 lakh to invest.
SCSS Interest Rate
The current rate of interest for SCSS deposits is 8.2% per annum (Note: it can change every quarter).
What makes it special?
By depositing a lump sum in SCSS, the account holder gets quarterly interest under this scheme.
Of course, the investment is locked for five years, but it is totally justified given the higher ROI. (Plus, emergency withdrawals are allowed anyway).
Just imagine: 8.2% for a totally risk-free investment? extensions? I mean, what more can we ask for in old age when our retirement kitty is made so powerful for life time. Recent changes to SCSS rules now allow extending the account for blocks of 3 years till as many years as you want.
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