Dear Mohan,
As explained by Vinay it is a contributory pension fund made to 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 certain conditions as laid down in the LIC Superannuation Scheme and agreed by both LIC and the employer the employee gets benefit 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 amount directly from LIC.
In some companies the employee is given superannution benefit 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 extend it to all employees in that cadre.
LIC offers a wide range of options in choosing the mode of pension like 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 option to receive it monthly, quarterly, half yearly or annual basis.
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 bonus on capital based on the size of the capital available with it for the respective employees.
Trust the matter is clear
M.V.KANNAN