Senior citizen: I invested in SCSS account at 7.4% in 2021. Why am I not getting 8.2% interest now?

Satinath Mukherjee opened a Senior Citizen Savings Scheme (SCSS) account in March 2021 when the interest rate offered under this scheme was 7.4%.

The senior citizen is now wondering why he is not getting the benefit of the higher SCSS interest rate.

"I opened an account (SCSS in the Post Office) on 02-03-2021, and the interest rate was 7.4%. Subsequently, the interest rate increased, but I am not getting the effect of the increased interest rate. Kindly clarify in this respect," Mukherjee shared in an email with us recently.

This article answers Mukherjee's query, which will also be helpful for other senior citizens who may be planning to invest under SCSS.

The interest rate on a SCSS account deposit remains fixed for a subscriber for five years, even if the government changes it during this period.

In other words, the interest at which you open the SCSS account will not change for you for five years.

For example, as in Mukherjee's case, the interest rate of 7.4% will continue to apply for five years, i.e., till the date of maturity in 2026. After that, he can either extend the account for another three years at the then-applicable interest rate or start a new SCSS account, or withdraw the entire deposit.

If the SCSS interest rate is fixed for five years for a subscriber, then who benefits when the government increases the interest rate during this period? You may ask.

Well, the increased SCSS interest can be availed on new deposits. So, if the interest rate has increased and you want to benefit from it, then you should open a fresh account under the scheme.

In case the interest rate that you're getting is much lower than the latest interest rate offered by the post office, then you may even consider closing the old account prematurely and starting a new account.

However, you will need to pay a minor penalty on premature closure, which you must consider before deciding to close an existing SCSS account.

Is it a good time to open a SCSS account?

Further, in the wake of multiple repo rate cuts by the RBI in 2025, the interest rates for small savings schemes like SCSS are expected to be reduced. Therefore, this is a good time to start an SCSS account at 8.2% interest.

The scheme allows a senior citizen to invest up to ₹30 lakh.