Curious About Superannuation: Can You Get a Refund When You Resign?

Could you please tell me what Superannuation is? If I resign from the company, can I receive a refund of the superannuation amount? Please advise...

Attaining the age of retirement as per the procedure outlined in the appointment order is called superannuation. It may be 55 years, 58 years, or even 60; it all depends upon the appointment order.

Regards,
Balu

Dear Mohan, Superannuation, sometimes called ‘super’, is a special way of saving to provide yourself with an income when you retire. While there are other ways of saving for retirement, superannuation saving is different because it is linked with your employment. Your employer may be required to make superannuation contributions on your behalf to a special fund called a superannuation fund. These funds are special because if they meet certain Government rules, they may pay less tax than if you were to put the money in a bank account. There are more tax benefits for you when you retire.

Or in other words, simply it is a pension scheme (where normal pensions are not available). 15% of the basic salary is contributed by the employer to this scheme, and in most places, the LIC Group Insurance department manages these schemes. Hope it's clear...

Regards, Vinay Kumar

As elucidated by Vinay, it is nothing but a contributory pension fund. In most companies, such contributions are part of the CTC.

As explained by Vinay, it is a contributory pension fund made to the LIC Superannuation scheme by the employer. The employer contributes 15% of the Basic + DA of the employee every year. The employer generally gets a tax benefit of 27% (12% for PF & 15% for Superannuation contribution). The employee, on the other hand, does not receive this contribution on hand every month or year. But upon complying with certain conditions as laid down in the LIC Superannuation Scheme and agreed upon by both LIC and the employer, the employee gets benefits upon his superannuation (58 years). The contribution made by the employer is maintained by LIC similar to a savings bank account and communicated to the employer. However, the employee does not have any option to withdraw the amount directly from LIC.

In some companies, the employee is given superannuation benefits upon completing certain years of service, say 5 years of service. The superannuation benefits can be optional to certain cadres (Manager, Assistant Manager, etc.), but it cannot be for select employees in different cadres. In other words, if you decide to cover a particular cadre, you will have to extend it to all employees in that cadre.

Pension Options Offered by LIC

LIC offers a wide range of options in choosing the mode of pension like Pension for life with a return of capital or without a return of capital, Guaranteed pension for 5, 10, 15, or 20 years, Joint life, etc. The capital is the amount that is available in your account on the date of your exit from employment. Based on the options chosen by you, LIC will pay a pension based on your choice to receive it monthly, quarterly, half-yearly, or annually.

The employer has to process the Superannuation documents and advise LIC to make the payment.

In the event the employee does not fulfill the qualifying criteria and quits employment in the middle, then this amount can be adjusted by the employer in the subsequent year's contribution.

Please note that the capital amount vested with LIC carries interest. LIC also pays a bonus on the capital based on the size of the capital available with it for the respective employees.

Trust the matter is clear.

Regards,
M.V.KANNAN

Thank you, Mr. Khannan, for your extraordinary way of presenting the data. Great job, buddy. One additional piece of information is that employees under the Superannuation scheme need to submit an "Existence certificate" to LIC, duly signed by a gazetted officer/class I officer from LIC, a Registered Medical Practitioner with the registration number, or the Bank Manager of the concerned bank where the amount is to be deposited.

Generally, any changes in address/bank or other related matters need to be communicated to the LIC authorities periodically.

Regards,
Kamesh

Nice contributions by the members. Superannuation, as described above, can be a tax-saving measure and a forced saving every month. You will get interest as per the market rate on this too. However, to get this benefit, one must serve for 5 years. If that person resigns before that, then the whole amount will be forfeited. Also, even if you complete 5 years and then resign, you cannot claim the whole amount refund. You can only get 1/3rd of the amount, and the rest of the 2/3rd amount will exist as a bond in LIC, which will mature at your superannuating age.

Regards,
Sumeet Jindal

Differences between Superannuation and Retirement

Superannuation refers to the act of being relieved from service upon reaching a specified age, such as 58 years old. On the other hand, retirement also involves being relieved from service, but it may not necessarily be due to reaching a specific age. It can include voluntary retirement or even compulsory retirement. While superannuation is a form of retirement, retirement does not always equate to superannuation.

I am a little confused even after reading. I would really appreciate it if someone could help me solve my doubt.

What is the difference between the following:

1. SA & Gratuity
SA is payable if you have served continuously for at least 5 years (Courtesy of Summet Jindal - Post #7).

2. SA & Pension
Simply, it is a pension scheme, where normal pensions are not available. (Courtesy of Vinay Kumar - Post #3).

3. SA & Retirement
SA is to get relieved from the position on attainment of a specific age. Though SA is retirement, retirement is not SA. (Courtesy of Niket_xiss - Post #8).

Thanks a lot.

Superannuation

A type of retirement plan set up by a company for the benefit of its employees. These types of plans use funds deposited by the company (defined benefit plan) or by the employee (defined contribution plan), with the funds growing in value until the employee retires. Also called a pension plan.

As explained by Vinay, it is a contributory pension fund made to the LIC Superannuation scheme by the employer. The employer contributes 15% of the Basic + DA of the employee every year. The employer generally gets a tax benefit of 27% (12% for PF & 15% for Superannuation contribution). The employee, on the other hand, does not receive this contribution on hand every month or year. But upon complying with certain conditions as laid down in the LIC Superannuation Scheme and agreed upon by both LIC and the employer, the employee gets benefits upon his superannuation (58 years). The contribution made by the employer is maintained by LIC similar to a savings bank account and communicated to the employer. However, the employee does not have any option to withdraw the amount directly from LIC.

In some companies, the employee is given superannuation benefits upon completing certain years of service, say 5 years of service. The superannuation benefits can be optional for certain cadres (Manager, Assistant Manager, etc.), but it cannot be for select employees in different cadres. In other words, if you decide to cover a particular cadre, you will have to extend it to all employees in that cadre.

Options for Pension Mode

LIC offers a wide range of options in choosing the mode of pension, such as Pension for life with return of capital or without return of capital, Guaranteed pension for 5, 10, 15, or 20 years, Joint life, etc. The capital is the amount that is available in your account on the date of your exit from employment. Based on the options chosen by you, LIC will pay pension based on your choice to receive it monthly, quarterly, half-yearly, or annually.

The employer has to process the Superannuation documents and advise LIC to make the payment. In the event the employee does not fulfill the qualifying criteria and quits employment in the middle, then this amount can be adjusted by the employer in the subsequent year's contribution.

Please note that the capital amount vested with LIC carries interest. LIC also pays a bonus on capital based on the size of the capital available with it for the respective employees.

Trust the matter is clear.

Regards,
M.V. KANNAN

The statement you have sought clarification on means, "If the employee who is enrolled in the Superannuation scheme quits employment before 5 years, as per the company policy, he may not be eligible for superannuation benefits. Hence, the amount accrued against his name till the time he quit employment can be adjusted against future dues payable to LIC.

For example, if a sum of Rs. 1,00,000/- has accrued against the employee's account who has quit employment before completion of 5 years, he will not be eligible for Superannuation benefits as per the company policy. In such a case, this 1 Lakh can be adjusted against the payment due to LIC the subsequent year. In other words, if the company has to pay say 5 Lakhs based on the calculations for the existing employees as of that date, they can adjust this 1 Lakh and pay 4 Lakhs to LIC.

Trust the matter is clarified.

Regards,
M.V. Kannan

Dear Sir, while searching through Cite HR for Superannuation, I stumbled upon this old thread. I seek your advice for my case. After working for 16 years with a public limited company, I resigned due to some personal issues. Though I received my PF/Gratuity back, my ex-employer is not ready to refund the kitty of SUPERANNUATION (approximately Rs. 7 Lacs). They are telling me that this will have to be routed through LIC ONLY. As I have started a small business, I am struggling for working capital. Kindly advise.

Regards

Dear Colleague, this discussion seems to have rather dragged on for no good reason. Employer, as a matter of policy, creates this retirement benefit for certain categories of employees (generally senior managerial personnel). The Superannuation Fund is created through annual contributions by the employer, contributing 15% of the basic and D.A. of the covered employees. The fund is managed/administered by LIC. Superannuation fund, meant for post-retirement benefits, is usually payable to eligible employees upon reaching the retirement age as specified. However, certain companies make it payable after completion of 5 years of service. So, whether the poster is eligible to receive it depends on whether the scheme in his company has provided for it. Anyway, generally, the schemes do not make service of less than 5 years eligible for receiving it.

Gratuity payment is now governed by the Payment of Gratuity Act, and the amount is payable after completion of 5 years of service, on death, or on retirement. Gratuity, prior to the law, originally started as a payment in recognition of long and loyal service to the organization.

Regards, Vinayak Nagarkar HR Consultant

Superannuation: An employee will only receive the amount when they reach 58 years of age. This provision applies to government employees who have served in government positions for an extended period until their retirement without changing their service.

Cessation: Employees working in private organizations such as software companies fall under cessation. This category pertains to employees who frequently change companies and work for short periods at each.

Thanks,
Vinod M