As an employer, your main objective would be to satisfy and motivate your employees so that they take your organisation to new heights! While you must be thinking of providing the basic facilities including a group health insurance to boost your employees’ morale, it may not be enough. In today’s world, the majority of employees seek a greater security in the form of long-term benefits from their employer. A security cover that remains with them even after they leave or retire from their respective jobs can be a good idea, isn’t it? This is where a group superannuation benefit comes into the picture!
A superannuation fund is a retirement benefit in which the employer needs to deposit a fixed amount for all the employees of the organisation. Well, it might not be possible for a business owner to deposit the amount for each employee regularly at the same time, given the uncertain market conditions and business situation. As a result, insurers offer the provision of creating a superannuation fund to the employer where monthly superannuation contributions and other administrative charges for each employee can be deposited in the same policy account. When an employee retires, they will receive the money as retirement corpus.
While availing the policy, the employer is free to choose between a defined benefit plan or a defined contribution plan. Most business owners would prefer to choose the latter as it fixes the monthly expense in the form of the fixed contribution to be done. Also, it does not require one to disclose the details of amount deposited to one’s employees.
Let’s look at how availing a group superannuation scheme can be one of the key factors in attracting and retaining talented employees.
1. Contribution purely by employer:
- In a superannuation policy, the employer is bound to make the entire contribution for each of his employees.
- However, if an employee chooses, he can contribute personally to the account in case of certain kinds of policies.
2. Tax saving for the employee in case he contributes:
- It is well known that the creation of a superannuation fund reduces the taxable income of the business as contributions towards it qualify as business expenses.
- However, for an employee who may opt to pay some part of it, his contribution qualifies for tax deduction (up to 5 lakhs) under section 80 C of the Income Tax Act.
- So, it can be one of the great ways to reduce taxable income along with preparing for retirement.
3. Financial security for a nominee after death:
- The benefit paid to nominee in such a case shall be exempt from tax and shall be as per the scheme rules of the employer’s superannuation scheme.
- A superannuation fund continues to benefit the family members (spouse, kids or parents) of the employee even after his death.
4. Annuity schemes can be opted at retirement or resignation:
- In case of retirement, an employee who has been contributing to the superannuation fund during their job, has the option of receiving a fund-linked pension also known as an annuity.
- If an employee chooses to receive a pension through annuity scheme, one-third of the commuted benefit is exempt from taxes.
- For example, if an employee retires or resigns with a superannuation fund of Rs.12,00,000 and chooses to receive an annuity, then, Rs. 4,00,000 will be tax-free for him. However, if an employee chooses to receive the entire amount immediately, taxes will apply to the whole amount.
After looking at the above benefits for the employee, if you are still thinking it to be an additional expense on your part, you need to be aware of an additional benefit of this scheme.
Unlike other group insurance plans, the amount you deposit in the chosen superannuation fund with any insurer does not lie idle. It is invested in securities by the insurer which further brings additional returns for your business (at least till an employee retires/resigns). So, it can be a win-win situation for the employer along with satisfying the employee and ensuring him security after retirement.
How to Buy?
It is possible to buy a group superannuation scheme in a few clicks of the mouse. To buy the policy, visit SecureNow, and fill in some basic details, like the number of workers, name of the company, benefits to avail, etc.; and buy the suitable policy online. Moreover, in most of the cases, the policy is issued within 24 hours once all the documents are submitted and verified by the insurer. Even after purchasing the policy, you can take help of SecureNow in cases like adding or removing an employee’s name, filing a claim, etc. Your one call to SecureNow can take care of all your worries.
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