Group Superannuation

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Superannuation being one integral aspect of social security is available as a product to the employers at different benefit rates in India. Employers have a market where they can compare and hitherto identify the best plans available.

While the pre-retirement accumulation plans are offered by the Central Govt. Authority, the post-retirement annuities can be bought from either life insurers with the following options:

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

Life insurers also offer Unit Linked Pension Plans, where investor can decide the investment asset while accumulating the corpus and on maturity pension starts (usually at 60 yrs. of age) for a predefined period.

Or from banks and mutual funds who offer Monthly Income Plans with the following features:

  • Pension monthly, quarterly, half yearly
  • Limited deposits for Banks
  • Equity Exposure for MIPs offered by Mutual Funds

Click here to know what are the tax benefits available with superannuation schemes in India

Case on Superannuation Schemes in India

Jatin Sharma is turning 60 this month, he’ll have two celebrations on the occasion. One, he would’ve completed 10 years in his current organization, and his unparalleled tenure. He is expected to receive approximately Rs. 1.3 Cr. as gratuity and other retirement benefits.

He has been advised by his tax advisor that he should use at least 60% of this money to create a pension stream for himself. He estimates that approximately Rs. 35 Lakh is already in pension fund which will be generating a monthly income of Rs. 21,500 a month, which may not be sufficient for Jatin going forward as inflation rises.

He advises Jatin to use another Rs. 10 Lakh to purchase a pension plan from a life insurer, which should start at least 5 to 10 years from now, and meanwhile it’ll be growing tax free with the insurer. Another Rs. 10 Lakh should be invested in a balanced mutual fund to get high growth for next 10 years, after which the maturity amount can again be used to create additional pension.

While the remaining amount will be useful to eliminate ongoing loans and buy a vacation house for Jatin’s and his wife.

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