In a post-budget interview with PTI, Somanathan said the caps on the seniors’ savings program had been unchanged for some time and the decision to raise the cap was primarily a measure for class welfare. average and elderly.
“There was a feeling that older people needed safe investment options, and incomes have increased between the last review and now. So this doubling of the cap gives seniors a chance to put their money in a 100 percent safe investment with an attractive interest rate, which is significantly higher than in banks,” Somanathan said.
The investment limit in Postal Monthly Income Schemes has not been revised since 1987. In the case of the Senior Citizens’ Savings Scheme (SCSS), the investment limit was set in 2004.
The senior finance ministry official said the decision to revise the caps will come at a cost, as the government can raise funds at a cheaper rate compared to the 8% interest it provides under the Senior Citizen Savings Scheme.
“In view of the well-being of the elderly, for whom fixed income instruments are the main source of income (…), it was decided that this was a cost that the government should bear and , therefore, the ceilings have been increased,” he said.
Similarly, on the monthly income scheme (MIS), which is another instrument favored by the middle classes and seniors, the decision to revise the investment ceiling was taken. The MIS, which is a 5-year deposit system, currently offers an interest rate of 7.1%. “There is a cost because it is a bit expensive compared to the alternative sources the government can raise funds from, but it was felt to be something they deserve, given the circumstances in which we we find,” Somanathan added.
The government reviews and sets the interest rate for small savings plans every quarter. Savings accounts for seniors can be opened by seniors over 60 years old. Deposits can be made for five years.
