HYDERABAD: In the later part of one’s life, when safety of investments becomes a bigger priority than returns, Senior Citizen Saving Scheme (SCSS) offered by the India Post can be a good option for elderly investors.
The prime advantage of SCSS is that even on the returns front, it offers a better rate than several other options available for senior citizens. It offers flexibility, thus making it ideal for elderly investors.
While normally a person needs to be of the age of 60 years or more to open a SCSS account, in special circumstances, an individual aged 55 years or more but less than 60, and has retired on superannuation or under VRS can also open an account, subject to the condition that the account is opened within one month of receipt of retirement benefits. The investment should not exceed the amount of retirement benefits.
“After 60 years, an investor’s top priority is safety. At the same time, they cannot also compromise on returns because by that time, their income sources would have been limited. In such a delicate situation, the SCSS of the postal department will be apt for elderly people, in striking the balance between safety and returns. SCSS offers 8.3 per cent returns per annum on deposits, which is more than even the interest offered by banks to senior citizens on fixed deposits. It offers better returns than even the National Savings Certificate.
Thus, it can be unambiguously said that SCSS is the best option for elderly people to utilise their savings best and maximise returns in the later part of their lives, when their risk appetite is less,” explains M Devaraja Reddy, senior Chartered Accountant and former president of ICAI.
The fact that SCSS is offered by the postal department and can be availed from any post office in one’s neighbourhood brings in trust and ensures ease of operation. Though the practice of investing in equities, mutual funds and others is rising, the traditional bond people have with post offices over the decades also instils a sense of confidence in the scheme.
The scheme is also flexible. An individual can deposit in one SCSS account up to a maximum amount of Rs 15 lakh. A depositor may also operate more than one account in individual capacity or jointly with spouse. While the maturity period is five years, premature closure is allowed after one year on deduction of an amount equal to 1.5 per cent of the deposit and after two years, on deduction of one per cent of the deposit.
“One should plan one’s investments with more caution and wisdom in the later part of life. While investing in equities, mutual funds and equity-linked savings schemes might give better returns if planned properly, they also have a risk element. Even if one invests a part in risky avenues, it would be definitely wise to invest some part of their money in SCSS offered by the postal department. I suggest elderly investors to make SCSS part of their portfolio, due to its good returns and security,” stresses Subba Rao Anupindi, a senior CA and financial adviser.