Q&A
Home Top New Follow Journal Login
Hi Friends, Can anybody give me the brief idea of the Superannuation? :?
From India, Mumbai
Dear Seniors Please give your version on Annuties and super annuties and their calculations and their reflections on employee benefits! Waiting for your kind reply! A N A N D A
From India, Bangalore
hi
All the benifits,arrears,compensations ( if any ), to be more precise the final settlement made financially for a employee on his retirement is know as Superannuation.
Think u get a picture.
Regards
satya
From India, Hyderabad
Hi !

Here is some information on Superannuation Fund.

a) Superannuation Fund is a retirement benefit given to employees by the

Company.

b) Normally the Company has a link with agencies like LIC

Superannuation Fund, where their contributions are paid.

c) The Company pays 15% of basic wages as superannuation

contribution. There is no contribution from the employee.

d) This contribution is invested by the Fund in various securities as per

investment pattern prescribed.

e) Interest on contributions is credited to the members account. Normally

the rate of interest is equivalent to the PF interest rate.

f) On attaining the retirement age, the member is eligible to take 25% of

the balance available in his/her account as a tax free benefit.

g) The balance 75% is put in a annuity fund, and the agency (LIC) will

pay the member a monthly/quarterly/periodic annuity returns

depending on the option exercised by the member. This payment

received regularly is taxable.

h) In the case of resignation of the employee, the employee has the

option to transfer his amount to the new employer. If the new

employer does not have a Superannuation scheme, then the employee

can withdraw the amount in the account, subject to deduction of tax

and approval of IT department, or retain the amount in the Fund, till

the superannuation age.

Normally Companies do not extend the Superannuation benefits to all employees- but only to a specific category of employees - like for example Level-1 of Managers onwards..

Hope the above has thrown sufficient light on the topic of Superannuation.

Regards

P.Arun Kumar
From India, Bangalore
Thanks Mr. Arun for thebrief idea of the super annuation. Do employer have to file any Half Yearly or Yearly returns of superannuation? and to whome? Shweta
From India, Mumbai
There is no statutory compliances regarding Superannuation Fund - like periodic returns etc.
THe company only has to ensure that the relevant rules pertaining to Income tax is followed at the time of releasing / transferring the superannuation fund amount. - Pls refer the points mentioned in my earlier mail.
Regards
P.Arun Kumar
From India, Bangalore
Dear Mr. Arunkumar,

Your mail on Superannuation was quite comprehensive.

However, I would like to draw your attention to a few points:

point E) You have mentioned that the rate of interest is almost as much as the PF rates. With LIC I have found that the Rate of interest is decided by them based on not just the superannuation fund value i.e. the amount paid to them for maintaining the superannuation fund of the company. In case the gratuity fund is also maintained with them then the gratuity fund value and superannuation fund value are combined to provide the interest rate on the fund. They have different slabs for different fund sizes and this varies every year.

Point F) & point H) In my company whether the person has resigned or retired for withdrawal from the fund with LIC, only 33% of the amount is allowed to be withdrawn from the fund. The rest is converted into capital for payment of annuities. Both the option of withdrawal & option for annuities has to be clearly mentioned by the member for availing benefits. The annuity amount would vary depending on age of the employee at time of applying for annuity, individual fund size, and whether the option is for monthly, quarterly, half-yearly or annual payments of annuity.

With warm regards,

Swapna
From India, New Delhi
If the Employer leaves the company within 2 years & joins the new company, will he eligible to withdrawn the superannuation amount from the old company.
Is there any facility to transfer this amount to new employer from Old employer.
Please reply on this
rgds
Chidanand
From India, Bangalore
[HTML] c) The Company pays 15% of basic wages as superannuation
contribution. There is no contribution from the employee.[/HTML]
Hi,
Can I get section #, rule # i.e legal text to support this.
My employer is deducting 27% of basic every month from each employee salary.
Also says legally it can be paid only after minimum 5 years of completion of service with the same company. Is it so?
Thanks,
Saurabh
From India, Delhi
How is superannuation paid in the following cases
(i) Employee resigns after a year of service
(ii) Employee resigns after five years of service but before retirement?
(iii)Employee resigns after ten years of service but before retirement?
Hari
From India, Delhi
Hye Arun,
I want to know the procedure for withdrawal and transfer of Superannuation contribution? Suppose an employee has changed his job and if he want to tranfer his superannuation what he has to do. Is there any form to be filled and to whom he will have to submit the form.? Please give the details in this forum and also it will be kind to you if you send details on my ID -
Regards,
Naveen
From India, Visakhapatnam
In case the reitrement of an Employee is extended, what are the changes in the policies that will be made for him after 58 ( if this is the retirement age )
From India, Delhi
In my company we do not have this super annuation scheme. But one of my employees was previously working for a different company where he had the super annuation scheme. SO now he wants to withdraw it, so can he withdraw this amt? will it be taxable or is it safe to keep the amount in his previous company only which he can claim once he retires? Pls guide me on this.
From India, Pune
Dear Friends,

I am facing a specific problem in connection with the recent job change.If any one can give me the right advice,it will be a great help

1.My company has deducted Rs.40000 per year towards superannuation for 3 years.But when I left, in my claim of full and final,I mentioned this amount.But they says it is retirement benefit which i can't claim.
I asked them to provide me the Superannuation fund details on which they have deposited my super annuation amount but they are not ready to give that.I found out that there is no such fund and it was just a appointment/revision lette gimmic. Is there any leagal way thru which I can get this money back

2.There was an amount of Rs.12000 mentioned in the appointment / revision letters towards Gratuity. I know that the gratuity is claimable only after 5 years.But at the same time, someone told me that the Gratuity cannot be the part of CTC.It must be beyond any employee's contribution
Is there any way to get this money back

3.My salary revision was due in the month of May 08.But they did it during october first week.And it was mentioned that the salary revision is with effect from 1st May 2008. I accepted the revision letter by affixing my signature with date.But when I left the company by the end of october and I claimed the full and final,I added this arears also.But when they settled the account,they didn't consider this arears.A total sum of Rs.90000 was there towards this arears.

Can anyone give me a right advice on how to proceed on the above points to get these money back.It is not a small money

Please help

Pr
From India, Bangalore
Anonymous
I was covered under superannuation scheme at L&T from 2000 to 2005. I left them in 2006. Now they are telling that I am not eligible to receive the money accumulated under the scheme. Is it correct?
From India, Lucknow
nice discussion thnks arun for ur valuble suggestion . Do u know which year the super annuation is started? or any act is there related to this. kindly explain.
From India, Madras
Dear All,

I would like to highlight some more things on the Superannuation benefit.

Superannuation is basically what we call pension on retirement. Life Insurance Corporation is the biggest institution selling pension annuities to various companies and sending pensions directly to the bank account of pensioners . Almost all the companies other than state and central Govt concerns have their pension arrangements with LIC. Any company can arrange pension thro LIC subject to the following conditions :

There must be a Trust Deed and Rules of the Fund approved by the Income Tax authority having jurisdiction over the Company.There must be a Board of Trustees of the Fund as per rules of the Fund and a Fund Manager who will advice LIC about annuity purchases / widow pension and refund of capital sum. It is not necessary that contribution have to be 15% but as per IT Rule maximum contribution for pension fund is 15 % on which company will get tax benefit.As per IT Act total contribution put together PF nd pension on which a Company gets tax benefit is 27%. Since PF covers 12% which is statutory the maximum allowable limit for pension contribution is 15 % on basic salary. Since Superannuation is not a statutory matter the lower limit can be anything which depends on the Company.The Scheme broadly can be of two types - DB scheme( Defined Benefit) and DC( Defined contribution) Under DB scheme contribution is paid to LIC based on Actuarial Valuation while under DC straightaway contributions as per fund rule can be remitted to LIC. However, when u start the fund u have be valued the liability actuarially by submitting data to LIC .The interest earned by pension fund is not like PF and much lower than 12%.The current LIC rate of interest is between 7- 7.5%.Under DB scheme pension and the capital sum is determined on the last salary of the retiree and LIC annuity rate.Under DC accumulated sum is the capital sum but quantum of pension is determined by available LIC annuity rate. The age of the pensioner and his spouse is taken into consideration for annuity rate.One can opt for 2/3rd widow pension on his death or can opt for refund of capital sum to the nominee on his death. A person can commute 1/3rd of his pension which is 33% of the pension.The pension once fixed is fixed for life . Like Govt pension it is not DA linked and thereby it does not increase at any point of time.Pensioners have to submit Life Certificate as per LIC requirement.

There are many other things u have to take into consideration when u set a superannuation fund which cannot be explained here. These are only few important points.
From India, Calcutta
Hi all

The following write-up on superannuation from a leading Insurance company would be of use to you all i hope

Best regards

Niranjan R



Group Superannuation Scheme

An organization today, has not only to man the various positions with competent and trained personnel but also has to create an environment wherein they can give their best and derive a sense of well-being, a sense of fulfillment and security and take pride in their continued association with the organization. Provision of pension may be an attraction for such persons to continue in the organization and give their best to the organization, as with continuous improvement in longevity a regular income even after retirement has become a necessity. To provide the pension benefits to employees, an employer has two alternatives under the provisions of Rule 89 of Income Tax Rules 1962.

Create a privately managed trust fund and as and when a member retires, purchase annuity from insurance company to provide pension for such retiring member.

Entrust the Management of the Pension Fund to an Insurer by purchasing its Group Superannuation Scheme.

ADVANTAGES OF THE MANAGED PENSION FUND:

Group Insurance in conjunction with the Group Superannuation Scheme can be taken by an Organization to provide for an attractive lump sum payment on the unfortunate death of a member while in service, at very nominal cost.

The employer contributes a certain fixed percentage of salary of each member. Such Contributions are accumulated by fund manager and the accumulated amount is utilized to provide various benefits as mentioned below.

BENEFITS:

1) ON RETIREMENT:

On Retirement of a member, the corpus (contributions plus interest) is utilized to provide the pension as per his choice.

2) ON DEATH:

The Pension is payable on the life of the beneficiary. Corpus is utilized towards the payment of pension of the type the beneficiary may opt and the benefit so received is tax free. A lump sum payable by way of death besides the pension, if the employer has taken Group Insurance Scheme in conjunction with the Group Superannuation Scheme.

3) ON WITHDRAWAL:

He can get the equitable interest transferred to the Superannuation Scheme of the new employer or opt for immediate or deferred pension.

PENSION OPTIONS

Life Pension ceasing at death.

Life Pension with Return of Capital and Group Pension Terminal Bonus on death.

Life Pension guaranteed for 5,10,15 or 20 years and life thereafter.

Joint Life Pension payable on the last survivor of the employee and spouse.

Joint Life Pension payable to the last survivor of the employee and spouse with return of capital on the death of the last survivor. If desired , 1/3rd of the pension can be commuted at vesting.

ELIGIBILITY CONDITION:

It is not obligatory or statutory on the part of the employer to provide for pension to all employees. It is entirely upto him to decide to which class/ classes of employees he desires to extends the scheme. The eligibility conditions may be defined on the basis of designation or salary. (However, after the categories are specified, employer cannot discriminate between the employees and thus extends the scheme uniformly).

CONTRIBUTION:

The maximum annual contribution that an employer can make to the Pension Fund and Provident Fund is restricted by the Income Tax Provisions to 27% of the annual salary (basic plus D.A.) The annual contributions are treated as deductible business expenses.

WHO PAYS CONTRIBUTION?

Mostly the employer contributes, but is so desired, both the employer and the employees may contribute, in which case the scheme is called a Contributory Pension Fund Scheme.

TAX BENEFITS:

The provisions relating to the approved Superannuation Scheme are set out in Part 'B' of the Fourth Scheme of the Income-Tax Act, 1961 and Part XIII of the Income Tax Rules , 1962. The income tax concession will be available only if the scheme is approved by the CIT.

The annual contribution is treated as a deductible business expense in term of Section 36(1) (iv) of the I.T. Act.

In terms of a Notification issued by the Central Board of Direct Taxes .80% of the contribution (s) towards the past service liability are treated as deductible business expenses spread over in the subsequent years of payment.

The employee's contribution , in the case of the Contributions scheme qualifies for exemption under Section 80C of the Income-Tax Act.

GROUP INSURANCE SCHEME IN CONJUNCTION WITH SUPERANNUATION SCHEME:

The members of the Group Superannuation scheme can be covered under Group Insurance in conjunction with superannuation scheme so as to provide death risk cover while in service subject to certain conditions.
From India, Madras
You need to check with your company as companies decide the eligibility criteria and superannuation is not a statutory benefit
From India, Madras
Hello All,
I will just point out one thing. The cash option in superannuation which is called commutation is 33.3% and not 25 % and the balance 66.6% is invested to buy an annuity to pay the annuitant monthly pension.
From India, Calcutta
Dear Sir, you said there is no contribution from the employee and only employer pay 15% of basic in super anuation fund, whereas my company deduct above 5000 Rs. PM towards SA.. Can you please clarify if I took it correct?
Second question is how can I see balance of my superanuation or gratuity fund?
From India, Dehra Dun
Dear Swapna ,

The querry raised by you for point (e) is correct , LIC Looks at the combined value of the corpus (Available/Maintained Gratuity & Superannuation Fund ) for deciding the rate of interest , they have a defined slabs according to which they give interest on the corpus. A higher or a lower rate of interest given by LIC is also dependent on the bargaining powers of the employer with the LIC.

Point two of your is customised by your company , it goes according to the trsut deed with the LIC. Trustee of the scheme must have imposed such a clause.

With the changing business scenario , most of the employers are are bringing flexibility in the trsut deed, once upon a time Superannuation fund was used as a retention tool as majority of the employers where having 3 years cap , for claiming superannuation fund.

Brining Flexibility in the Trust deed requires approval of board of directors and then application is made to CIT (Commissioner of Income Tax ) , once approval is obatined trust deed variation is possible to make it more favourable to the employees or to the subscribers of the scheme.
From India, Rohtak
Dear Sir,
I have applied for full & final settlement of Superannuation fund on 30.06.10 with Century Cement. But to my utter surprise my claim is rejected by company on 29.7.10 that as per rules of superannuation fund the member should have to complete minimum 5 years of service with organization. I was covered under the superannuation scheme from 1.12.2006 to 28.8.2008 at the age of 54 years and resigned due to illness on 28.8.2008 after completion of 56 years of age. Between these periods I have received a yearly statement of contribution also. I am not working with any organization. Now company is telling that I am not eligible. Kindly advice.
It would be great to receive replies also on my email –
Regards,
Kailash Jha
From India, Delhi
Dear Sir,

I have applied for full & final settlement of Superannuation fund on 30.06.10 with Century Cement. But to my utter surprise my claim is rejected by company on 29.7.10 that as per rules of superannuation fund the member should have to complete minimum 5 years of service with organization. I was covered under the superannuation scheme from 1.12.2006 to 28.8.2008 at the age of 54 years and resigned due to illness on 28.8.2008 after completion of 56 years of age. Between these periods I have received a yearly statement of contribution also.

I am not working with any organization. Now company is telling that I am not eligible.

The company might have taken advantage of this and claimed Income Tax rebate from IT dept on the contributions towards the Superannuation fund amount deposited on my name.

So if company cannot pay this amount to me then how company can get the benefit of tax rebate on the funds deposited.

Kindly advice ASAP.

It would be great to receive replies also on my email –

Regards,

Kailash Jha
From India, Delhi
Hi, Arun, Please tell me under which sub-section of section 10 of income tax act,the interest of superannuation fund is exempted for tax
From India, Kalyan
Have been looking up the Super Annuation documentation. It states that he Company pays 15% of basic wages as superannuation contribution. There is no contribution from the employee. However, in the organsiation I work the same is being deduted from my CTC. Do let me know if this is right.
If this is a wrong doing by the organsation, whom should I approach.
Thanks and Regards,
Andre Fernandes
From India, Mumbai



To ask a question or write a reply on this discussion you will need to create an account and login.



About Us Advertise Contact Us
Privacy Policy Disclaimer Terms Of Service



All rights reserved @ 2017 Cite.Co™