Is new rate applicable to existing SCSS?

My question is whether the new interest rate is applicable to existing Senior Citizens Savings Scheme (SCSS) or only to new SCSS accounts. Is this not cheating when the government on February 16 says Sukanya and SCSS cater to social causes and hence they will not be touched? Then on March 18, conveniently after the budget session of parliament, changes interest rates.
- Prakash

The new interest rate of 8.6 per cent on Senior Citizen Savings Scheme (SCSS) will be applicable from April 1 to June 30. However, the new rate will apply only to new accounts. As for existing investors, the interest rate remains fixed for the first five five years. However, the rate of interest for the extended term of three years will be based on the prevailing interest rate on the date of maturity.

From the new financial year, the government has decided to align interest rates on small savings schemes with yields on government securities. The interest rate may be reset every quarter if there are any changes in yields. This may appear problematic, especially against the current practice of resetting rates every financial year. However, the positive aspect of the move is that it will help you to earn interests in line with rates of interest prevailing in the economy, especially when the interest rate starts moving up.

This article was originally published on March 22, 2016.