10 Facts about the Senior Citizens Savings Scheme

Being financially independent is a must for every individual in every phase of their lives, but it is never as critical as it is during retirement. The latter stages of life can bring several complications and doubts, especially when it comes to managing one's finances. But thankfully, senior citizens have a good number of financial products that offer guaranteed income during retirement.

The Senior Citizens Savings Scheme (SCSS) is one such instrument. Launched in 2004 by the Government of India, SCSS is a must-have investment for every retired individual. Here's why:

* SCSS provides an assured 9.30 per cent returns, paid quarterly
* Backed by the Government of India, SCSS is totally risk-free and offers complete capital protection
* The SCSS interest rate is aligned with G-Sec rates of similar maturity & notified every year before April 1
* Despite the 5-year lock-in, SCSS offers liquidity in the form of withdrawals that are subject to conditions and penalties
* Any retired Indian resident, above the age of 60, can invest in the SCSS
* You can begin investing in the SCSS with a minimum amount of Rs 1,000. The maximum amount is Rs 15 lakh
* SCSS has a tenure of 5 years, which can be extended by 3 more years
* SCSS investments are eligible for tax deduction under Section 80C. However, the interest earned is fully taxable
* An SCSS account can be opened at any post office or any of the 24 designated nationalized banks
* You can split the SCSS accounts for your spouse and yourself into two separate accounts to reduce the impact of early closure of an account

This article was originally published on February 18, 2014.