Death of account holder not to trigger automatic closure of Senior Citizen Saving Scheme Account

Finance Ministry has clarified that closure of Senior Citizens’ Savings Scheme (SCSS) accounts on the death of the account holder will not be treated as premature closure.  

The Ministry has issued this clarification as it came to know that some operating agencies are closing such accounts treating it as premature closure.

SCSS is a small saving scheme with higher interest rate in comparison to other small saving schemes. It can be opened in a post office.

A statement issued by the Finance Ministry said that premature closure clause does not trigger on account of demise of the SCSS account holder.

“The premature closure of the account is applicable only when the SCSS account holder requests for closure of own SCSS account before the maturity period. In such cases of premature closure of the account, a penalty shall be levied as mentioned in the rule,” it said.

Further, in cases where the SCSS account holder/s passes away and the account is being closed on request of the nominee/legal heir, the rate of interest as applicable on SCSS scheme shall be paid till the date of demise the account holder. Thereafter, the interest rate applicable on Post Office Savings Account shall be paid from the date of demise of the account holder till the date of final closure of the account.

Account under the Senior Citizens’ Savings Scheme can be opened by an individual after attaining the age of 60 years or above. In case of VRS, special VRS or retirement under superannuation, the age limit can be lowered to 55 years.

Also, retired personnel of Defence Services (excluding Civilian Defence employees) may open an account on attaining the age of 50 years. A depositor may open an account individually or jointly with spouse. Minimum deposit in SCSS is ₹1000 with maximum deposit of ₹15 lakh.

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