Have your parents invested in Senior Citizen Savings Scheme (SCSS)? Are they planning to invest more in the scheme? Let us see how this scheme has fared and whether you should continue with it.

SCSS is a 5 year scheme, first introduced in 2004. It became very popular as it offered the highest assured return of 9%. You get paid interest each quarter, thus making it beneficial for senior citizens who have no other source of income.

Besides high returns and safety, you also enjoy tax benefit. Investments up to Rs 1 lakh are deductible under section 80C of the Income Tax Act.

But when it comes to renewal, you can only renew the scheme for maximum of 3 years. Also with the entry of direct tax code, there is no guarantee whether the tax benefit will continue.

Moreover these instruments are highly illiquid. It means you are stuck with the investment till the end of tenure. Now if you need cash on an urgent basis, you are stuck. Moreover SCSS is not transferable. So if you want to shift your investment from one bank or post office to another, you will not be able o do it.

Also for those senior citizens who have high investment corpus, SCSS will not offer high returns. In such instances, these investors are better off investing their funds in slightly riskier options like monthly income plans or balanced funds.