Though in most of the cases, the benefits under group superannuation is payable only at the time of retirement, there are some incidents where group superannuation benefit may be payable. Here are those-
- At the time of retirement – For starters, we are covering this benefit as well. You always have an option to use your group superannuation fund at the time of retirement. When you retire, you would have two options with you. First, you can use to withdraw money from your group superannuation fund or second, you can continue using the fund fully as a pension.
The current rule states that you can withdraw only a certain portion of the total proceedings from your funds, while the remaining amount, you would have to convert as regular pension, which will be placed in the annuity fund and would be paid either as a monthly, quarterly or annual return as per the case.
Here, note, if you continue to work even after retirement with the consent of your employer, in that case, the vesting date will be your actual date of retirement.
- At the time of leaving the job – If the employee resigns and joins the other company, it is possible to withdraw the benefits of group superannuation insurance scheme if the new employer is not offering the scheme. You can withdraw the amount subject to the approval of the Income Tax department with regards to tax deductions. It is not always necessary to withdraw money from group superannuation as you can choose to let the proceeds lie in the superannuation fund till the time of retirement. After retirement, you can use superannuation funds to get a pension.
- At the time of terminating your services – If your service is terminated before the actual retirement date, the benefits can be paid either immediately or at the normal retirement date. However, if the termination is due to fraud or any illegal activity, the entitlement of benefits would be as per the rules of the fund.
- At the time of death – In case the employee who was covered under group superannuation insurance died, the benefits under group superannuation scheme become payable. At this point, his/her nominee will be entitled to get benefits under group superannuation.
Read More: What are the tax benefits available with Superannuation Schemes in India?
- At the time of disability – Unfortunately, if the employee retires from the service due to adverse health and disability, the benefits will be paid on the date on which the employee ceases to be in employment.
Here, it is important to note that benefits which are payable at the time of death and injury are tax-free.
Case: 1
Incepted in 2009, L.K Automobile is one of the leading companies in the industry. The company has purchased a group superannuation scheme from Insurer X and is regularly contributing to its fund. In 2011, Rajesh Singh, the automobile engineer, died in an accident when his motorbike hit the truck. Here, the superannuation benefits were paid immediately to Rajesh’s nominee, who was his wife, Chitra. Though group superannuation scheme was meant for the retirement, here the scheme paid benefits on the death of Rajesh.
Read More : What are different Superannuation Schemes in India?
Case: 2
Since 2012, M.S Engineering has carved a niche for itself in the engineering sector. The company has also purchased a group superannuation scheme for all its schemes. Last year, Rahul Sarai, one of the engineers, resigned from the job and joined another company which was not offering group superannuation benefits.
As Rahul had resigned from M.S Engineering, his group superannuation scheme also ceased to exist. In this case, his new employer was not offering group superannuation scheme, and therefore, he withdrew his superannuation benefits at the time of changing the job.
Rahul could have transferred his group superannuation fund to the new employer if it was available with the new company as well.
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About The Author
Trisha
MBA Finance
With seven years of experience in the insurance industry, Trisha is a recognized expert in group superannuation. As a dedicated writer for SecureNow, she crafts insightful blogs and articles that clarify the complexities of group superannuation schemes. She is passionate about educating businesses on the benefits and management of retirement plans, making technical details accessible and practical. Their deep understanding of superannuation regulations and best practices ensures that readers receive up-to-date and valuable information, establishing Trisha as a trusted voice in the insurance community.
