Dear Mr. Saxena,
You can opt for either or both. However, if your superannuation is something like the LIC Group Superannuation Policy/Scheme, it may be safer to opt for one. Legally, it may not be ideal to draw pension from two different schemes, both being governed under different Government authorities.
Coverage will be till death. More commonly, the pension is payable on the life of the beneficiary. Family coverage is based on the policy guidelines/rules/deed of variation since Companies are known to tweak clauses of the standard template within permissible limits.
The 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.
On retirement, a member may opt for a pension from the normal retirement date. He may opt for payment of commuted value and pension, immediately in which case the benefits would be taxable.
In Superannuation Fund, on retirement, in most schemes, the corpus (contributions plus interest of a member) is most commonly utilized to provide the following:-
- Commuted Value (Equivalent to 1/3rd of the corpus) which is tax free.
- The corpus that remains after providing for the commuted value is taken as the purchased price to provide for pension.
For superannuation, the tax treatment under the IT Act for an approved fund is as under :
- Employer's contribution is exempt from tax
- Employee's contribution qualifies for deduction under section 88 (para111) or deduction under section 80C.
- Interest on the accumulated balance is exempt from tax.
- Section 10(13) grants exemption in respect of payment from the fund : (a). To legal heirs on the death of the beneficiary (e.g payment to widow of the beneficiary), or, (b). To an employee in lieu of or in commutation of an annuity on his retirement at or after the specified age or on his becoming incapacitated prior to such retirement, or, (c). by way or refund of contribution on the death of the beneficiary, or, (d). by way of refund of contribution to an employee on his leaving otherwise than in the circumstances mentioned in (b) to th extent to which payment does not exceed the contribution made prior to April 1, 1092. (for instance, where the amount received by an employee does not include any contribution made prior to April 1, 1062, the whole amount is taxable).
The cost-benefit of opting for either would depend on the tenure and amount of pension that you can draw from either. Depending on corpus allocated to PF Fund and Pension Scheme thereon, and, that in the Superannuation Scheme, it would be interesting to calculate which has a greater yield and then opt for one. As per my common understanding, upto a limit of 25% on PF + Superannuation Scheme permits taxable rebate under 80C of the IT Act. That means, in all probability PF contribution is 12% and Superannuation Fund contribution is 13%.
You could check these facts from your office. If they could assist, the HR/Finance deptt could help you in calculating the yield of both in terms of commutable corpus and commensurate yield of both. You could then decide.
Regards,
Rahul Kumar