SCSS account close to maturity date? Here's what retirees need to know about extending their account

The Senior Citizens Savings Scheme (SCSS) is one of the most popular fixed-income investment options for retirees as it offers government backing, regular quarterly payouts and higher interest rates than most fixed deposits.

The scheme comes with an initial maturity period of five years, post which the account holder can either withdraw their entire accumulated corpus or choose to extend the account in blocks of three years.

Who can open an SCSS account?

Any individual who is 60 years of age or older can open an SCSS account and invest in the scheme.

Individuals between 55 and 60 years of age are also eligible, provided they have retired under a superannuation or voluntary retirement scheme and open the account within one month of receiving retirement benefits.

In addition, retired defence personnel can invest in SCSS from the age of 50 years, subject to the applicable conditions.

Rules for tenure extension of SCSS account

Though an extension is allowed, it does not happen automatically the way some bank fixed deposits renew themselves. The account holder needs to submit a request for the extension within one year after the maturity period.

If the extension request is not made properly, the account will mature and the accumulated amount will simply stop earning the SCSS interest rate.

Earlier, an extension was allowed only once, however after an amendment notified in November 2023, investors can now do it as many times as they want, provided the request is made within one year after each maturity period.

Another important point to remember is that the extended period does not necessarily continue at the original interest rate. The applicable interest rate during the extended period is linked to the prevailing SCSS rate on the date the extension is approved and not when the account was opened.

This can work positively or negatively depending on the interest rate cycle at that time. At present, SCSS offers an interest rate of 8.2% per annum. The rates are reviewed quarterly by the government and are generally aligned with other small savings schemes. Interest under SCSS is paid on a quarterly basis.

How to apply for an extension of SCSS?

To extend an SCSS account after maturity, the account holder must follow the steps given below:

Step 1: Visit the post office or bank branch where your account is maintained.

Step 2: Fill and submit the prescribed Form-4 (or Form-B) for extension within one year from the date of maturity.

Step 3: SCSS account holders can also apply for an extension online through the Department of Posts' internet banking portal.

Step 5: Carry the original SCSS passbook or deposit receipt, your Aadhaar card and PAN card to apply for an extension. You must also be a resident citizen of India to be eligible.

Step 6: Once the extension is approved, the account can continue for an additional period of three years.

However, an account holder must note that an application for extension must be submitted within one year from the date of maturity.

Once an extension is approved, it is considered effective from the date of maturity itself, even if the application is submitted later within the allowed one-year period. This rule ensures there is no gap in interest payments.