ImageGroup Superannuation Scheme - Superannuation Policy & Plan for Employees

The Benefits of Group Superannuation Scheme

Better Returns

Under Group Superannuation scheme, the funds are invested scientifically and meticulously. Your funds are a well-researched mix of equity and debt. Since your fund is invested wisely, you are likely to get better investment returns. This will ultimately contribute to your employee’s long term financial goal or savings for their retirement years. Group Superannuation schemes are always fruitful in the long run.

Annuity Option

Pension plans for the employees, under Group Superannuation scheme, help in taking care of their retirements. Also, Group Superannuation plans allow multiple payout options yearly, half yearly, monthly, or quarterly. You can also buy annuities that return the premium to nominees in case of death, amounts are guaranteed for as long as you live or even options to increase in annuity benefit each year.

Nominal Cost

Superannuation scheme has the advantage of extending benefits to employees at a nominal cost. Employees can have a sizable corpus without you bearing a significant and hefty cost. The primary benefit is that a superannuation scheme encourages all the employees to save each month. This is a discipline that can result in large retirement savings for them - something that your employees will be grateful for.

Tax benefit

The employer’s contribution is treated as a business expense which reduces your tax incidence. Employees also benefit because the fund is not treated as a perquisite for the employee, which is tax efficient. Moreover, the contribution by the employee towards this policy is eligible for deduction under section 80C. Also, the benefits payable on death and the amount accumulated on maturity are exempt from tax.

Quick Guide to Group Superannuation Scheme

Definition of Group Superannuation

Group Superannuation plans are Pension benefits that an employer can choose for their employees’ benefits, that provide retirement benefits to the employees. This retirement benefit allows the employees to save a portion of their income, during their tenure of employment, to secure their future post retirement.

Benefits of Group Superannuation Scheme

For employees

  • Voluntary contribution towards a group superannuation scheme is eligible for tax deductions up to a maximum limit of ₹1.5 lakhs, in a financial year, under Section 80C
  • Death benefit under superannuation fund is tax-free
  • Interest earned for your superannuation fund is tax-free
  • After retirement, you can withdraw one-third of the fund accumulated under your superannuation account without having to pay any tax

For employers

  • Contribution made by the employer towards the employees’ superannuation fund is considered as tax deductible by the Income Tax Department.
  • The income generated by trusts which are self-managed of an approved superannuation fund is exempted from tax.

Functioning of Group Superannuation Plan

The organization contributes towards the group superannuation fund created for the employees

  • The employer can either manage the superannuation fund by their own trusts or open a superannuation benefit fund with any of the approved insurance companies or buy a superannuation product from an insurance company
  • The employer contributes a fixed percentage of up to a maximum of 15% of employees’ basic pay and dearness allowance towards an employee’s superannuation fund. Though contribution is made by employer, ideally superannuation is part of Cost to Company (CTC)
  • An employee may also opt to contribute towards their superannuation fund based on the clause in the chosen plan. At the time of retirement, the employee will be eligible to withdraw 1/3rd of the accumulated value and the rest will be credited as regular pension in defined or chosen intervals.
  • Superannuation funds are transferable and the employee can choose to transfer the funds towards the new employer’s superannuation scheme when changing jobs. If the new employer does not have a superannuation scheme, the employee can choose to withdraw the amount or retain it in the fund for retirement.

Eligibility of Group Superannuation Scheme

  • The minimum age of entry for a group superannuation scheme is 18 years
  • The maximum age of age of entry is 75 years
  • The maximum age at maturity of the superannuation scheme can be 85 years
  • The minimum group size for a new employer-employee superannuation scheme is 10
  • The is no limit for the maximum value of a group size

Types of Group Superannuation Scheme available

In India, superannuation plans come mainly in two types:

  • For accumulating retirement savings
  • For generating pensions after retirement

The common annuity options that are available are:

  • Annuity payable for life
  • Annuity payable for 5years/10years/15years life guaranteed
  • Annuity payable for life with a capital return
  • Annuity payable jointly on the life of husband and wife

Claim process for Group Superannuation Scheme

Superannuation pension plan is a fund managed by the employer. The claims to these funds can only be made in the mentioned scenarios and the funds In India, superannuation plans come mainly in two types:are transferred as per the below details.

  • If the employee dies during their service - the nominee of the employee receives the accumulated fund
  • If the employee changes their job – the employee can
    a. choose to transfer the accumulated fund to the new employer, if the new employer has a superannuation fund
    b. continue using the same fund for accumulation of wealth till they retire
    c. withdraw 1/3rd of the accumulated wealth and get the rest of the amount as pension on retirement
  • If the employee discontinues working or retires - they can choose to withdraw 1/3rd of the accumulated wealth and get the rest of the amount as pension on retirement

Documents required for Group Superannuation Scheme

Documents submitted for claims under group superannuation scheme differ by type of claim, the insurance company and the type of scheme taken. Below are a few general documents that are required to claim for a group superannuation scheme:

  • A duly filed and signed claim form, as prescribed by the insurance company
  • Original policy document
  • NEFT mandate for the claimant for direct transfer of money to the account
  • Proof of identity of claimant
  • In case of death of the insured – death certificate has to be produced by the claimant

Frequently Asked Questions

A group superannuation policy ensures that employees receive a pension or a regular stream of income after their retirement. It is basically a pension program declared by an organization for the future and long-term benefit of its employees. The accumulated fund is paid to the employee after his/her retirement from their service till his/her death.
An employee making a voluntary contribution towards a superannuation scheme is entitled for tax benefits up to a maximum of ₹1.5 lakhs under Section 80C. Similarly, contribution made by employers towards their employee superannuation fund is tax deductible as per Income Tax Department of India. Pension received would be taxable as per the regular income slab.
No. It is entirely up to the discretion of the employer to offer a superannuation scheme to their employee. Employers offer such schemes under employee welfare programs. It is a potent tool for employee retention as well as for attracting new resources to the company. Companies do have some mandatory provident fund requirements depending upon the size of the company and employee salaries.


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