modifications in prbs benefits -...
TRANSCRIPT
MODIFICATIONS IN PRBS BENEFITS
PRBS closed as on 31/12/2006.
The benefits of PRBS revised.
New scheme (DCPS) as per the DPE
guidelines implemented w.e.f. 01.01.2007
Pension calculation of members done in 2
parts:
1.Benefit under Defined pension scheme till
31.12.2006
2. Benefits under Defined Contribution scheme
from 01.01.2007 till date of retirement.
1.Benefit under PRBS
till 31.12.2006
• Revised Benefits of PRBS:
Revised monthly pension on actual DoR = 50% of Basic pay as on 01.01.2007 X Reckonable service / 33
Future value of Corpus (FVC) as on DoR :
Pension Benefit as above X 132.59
Discounted corpus value (DCV) as on 31.03.2012:
FVC/ 1.095^n (n= no of year fraction from 31.03.2012 to actual DoR)
One time corpus to be transferred to Individual’s pension Account
DCV* 1.085^N (N= No of year fraction from 01.04.2012 till actual
date of corpus transfer)
ONGC has contributed a one time subsidy of Rs 1624 Cr .
Calculation of Benefits under the scheme
Past Service (PS)
Period from date of joining ONGC to date of joining the Scheme
Future Service(FS)
Period from date of joining the Scheme to date of Superannuation.
Reckonable P.S. (RPS)
Reckonable F.S. (RFS)
(1- P.S. x 1.2/100) x P.S.
(1+F.S. x 0.6/100) x F.S. + 0.0002 x F.S. x F.S. x F.S.
DPE Guidelines for DC model
• Maximum 30% of Pay (Basic + DA) permitted as Post
Retirement Benefits
• Include PF, Gratuity, Post retirement medical benefits.
• The balance left to be contributed to an approved Pension
Plan operating on a DC model
• Pension Plan to operate only on DC model and no other
pension scheme to be supported by Management
• Pension scheme can get a maximum of 15% allocation out of
this 30% due to restrictions in IT Act.
2. Benefits under
Defined Contribution Pension Scheme (DCPS)
from 01.01.2007 till Date of Retirement (DoR).
Defined contribution model
Individual Pension account to be maintained
3 components of contribution:
1. Employer’s contribution: 15% of Basic + DA
2. Employee’s contribution: 3% of Basic + DA
3. Uniform subsidy as per existing provision
No death in service benefit as in PRBS
Corpus on cash basis to be used for purchase of
annuity
Pension benefit to depend on prevailing market
annuity interest rate as on DoR.
Provisions of Income Tax Act / Rules
Rule 87 of the Income Tax Rules, 1962:
- the ordinary annual contribution by employer shall not exceed 27% of the salary as reduced by the employer contribution if any, to any provident fund.
Section 115WB(1) of the I T Act, 1961:
- Contribution by the employer to an approved superannuation fund in excess of Rs. One Lac for each employee is chargeable to fringe benefit tax.
Merits:
1. Huge increase in contribution to the new pension fund w.e.f.
01.01.2007
2. Increased funding from Company
3. Contribution dynamic w.r.t increase in Basic and DA
4. Uniform subsidy to continue.
5. Contributions directly deposited in individual pension account
on cash basis (No cross subsidising of seniors by Juniors)
NEW PENSION SCHEME
Drawbacks:
1. No life cover for death in service as against PRBS.
2. Increased tax liability (Annual contribution above Rs 1 lakh taxable)
3. Exposed to market risk (Final pension dependent on prevailing market interest
rate
4. Formula for computing of corpus flawed.
5. Discounting rate considered very high (9.5%) resulting in devaluation of PV
of corpus.
6. Unequal distribution of benefits: Seniors get very huge additional subsidy
7. Since Basic as on 01.01.2007 is considered for pension calculation as against
the notional salary (Basis : Basic+DA+PP-92 as on16.11.1995), differential
career growth amongst different individuals / Disciplines will have impact on
final benefit.
NEW PENSION SCHEME
Sample Calculation : Past Benefit
Date of joining ONGC 20/10/1978
Date of joining PRBS Scheme 01/04/1990 11.45479
Date of Closure of PRBS 01/01/2007 16.76438
Reckonable past service (1-PS*1.2/100)*PS
9.8802
Escalated future service till 01.01.2007 (1+F.S. x 0.6/100) x F.S. + 0.0002 x F.S. x F.S. x F.S.
19.39295865
Total reckonable service as on 01.01.2007 29.2732
Basic on 01.01.2007 64170
PRBS Pension as on date of
superannuation 28462
Corpus as on date of superannuation 3773715
Date of Superannuation 31/07/2014
Fund reckoning Date 31/03/2012
Corpus Discount Years 2.33
Discounted corpus value as on 31.03.2012 3053282
Corpus transfer date 31/10/2013 1.586301
Appreciated corpus value as on 31.10.2013 3475115
Corpus transferred to Individual Account
vide Nov Pay Slip
The corpus transferred to Individual’s Pension Account in 3 parts
Part -1: Notional corpus of erstwhile PRBS discounted to 31.03.2012
Part 2: 15% of Basic + DA of individual w.e.f.01.01.2007
Part 3: The contributions to old PRBS scheme w.e.f 01.01.2007 till date
including 8.5% interest
Date of joining ONGC 16/09/1974
Date of joining PRBS Scheme 01/04/1990 15.55068
Date of Closure of PRBS 01/01/2007 16.76438
Reckonable past service (1-PS*1.2/100)*PS
12.6488
Escalated future service till 01.01.2007 (1+F.S. x 0.6/100) x F.S. + 0.0002 x F.S. x F.S. x F.S.
19.39295865
Total reckonable service as on 01.01.2007 32.0418
Basic on 01.01.2007 57860
PRBS Pension as on date of superannuation 28090
Corpus as on date of superannuation 3724445
Date of Superannuation 30/04/2007
Fund reckoning Date 30/04/2007
Corpus Discount Years 0.00
Discounted corpus value as onDOR 3724445 (Actual corpus to be transferred to
Individual's Pension account
Corpus transfer date 31/03/2012 4.923288
Appreciated corpus value as on DOR 3724445
Revised Benefit Old scheme Additional benefit
Corpus from Past scheme (PRBS) 3724445 1260000 2464445
Corpus from New Scheme (DCPS) 47018 0
Corpus from Addl Contribution 21920 0
Total Corpus on DoR 3793384 1260000 2073043
Pension without commutation (Scheme) 28610 10500 18110
1/3 Commutation 1264461 420000 844461
Balance Pension under Scheme "E" 19073 7000 12073
Sample calculation of total Benefit (DoR Apr 2007)
Sample calculation of total Benefit (DoR Jul 2012)
Date of joining ONGC 17/08/1981
Date of joining PRBS Scheme 01/04/1990 8.627397
Date of Closure of PRBS 01/01/2007 16.76438
Reckonable past service (1-PS*1.2/100)*PS
7.7342
Escalated future service till 01.01.2007 (1+F.S. x 0.6/100) x F.S. + 0.0002 x F.S. x F.S. x F.S.
19.39295865
Total reckonable service as on 01.01.2007 27.1272
Basic on 01.01.2007 57860
PRBS Pension as on date of superannuation 23781
Corpus as on date of superannuation 3153187
Date of Superannuation 31/07/2012
Fund reckoning Date 31/03/2012
Corpus Discount Years 0.33
Discounted corpus value as on31.03.2012 3058974 (Actual corpus transferred to
Individual's Pension account
Corpus transfer date 31/03/2012
Appreciated corpus value as on DOR 3143533
Revised Benefit Benefit as per Old scheme Addl benefit
Corpus from Past scheme (PRBS) 3143533 2230115 913418
Corpus from New Scheme (DCPS) 1180940 0
Corpus from Addl Contribution 383121 0
Total Corpus on DoR 4707593 2230115 2477478
Pension without commutation (Scheme) 35505 16577 18928
1/3 Commutation 1569198 743372 825826
Balance Pension under Scheme "E" 23670 11051 12619
Sample calculation of total Benefit (DoR Jul 2014)
Date of joining ONGC 20/10/1978
Date of joining PRBS Scheme 01/04/1990 11.45479
Date of Closure of PRBS 01/01/2007 16.76438
Reckonable past service (1-PS*1.2/100)*PS
9.8802
Escalated future service till 01.01.2007 (1+F.S. x 0.6/100) x F.S. + 0.0002 x F.S. x F.S. x F.S.
19.39295865
Total reckonable service as on 01.01.2007 29.2732
Basic on 01.01.2007 64170
PRBS Pension as on date of superannuation 28462
Corpus as on date of superannuation 3773715
Date of Superannuation 31/07/2014
Fund reckoning Date 31/03/2012
Corpus Discount Years 2.33
Discounted corpus value as on 31.03.2012 3053282
Corpus transfer date 31/10/2013 1.586301
Appreciated corpus value as on 31.10.2013 3475115
Corpus from Past scheme (PRBS) 3693760
Corpus from New Scheme (DCPS) 1942415
Corpus from Addl Contribution 620730 Benefit as per Old scheme Addl Benefit
Total Corpus on date of VRS 6256905 3530262 2726643
Pension without commutation (Scheme) 47190 26625 20564
1/3 Commutation 2085635 1176754 908881 Balance Pension under Scheme "E" 31460 17494 13966
Sample calculation of total Benefit (DoR Apr 2016)
Date of joining ONGC 29/06/1983
Date of joining PRBS Scheme 01/04/1990 6.761644
Date of Closure of PRBS 01/01/2007 16.76438
Reckonable past service (1-PS*1.2/100)*PS
6.2130
Escalated future service till 01.01.2007 (1+F.S. x 0.6/100) x F.S. + 0.0002 x F.S. x F.S. x F.S.
19.39295865
Total reckonable service as on 01.01.2007 25.6060
Basic on 01.01.2007 62020
PRBS Pension as on date of superannuation 24062
Corpus as on date of superannuation 3190360
Date of Superannuation 30/04/2016
Fund reckoning Date 31/03/2012
Corpus Discount Years 4.08
Discounted corpus value as on31.03.2012 2202094
(Actual corpus to be
transferred to Individual's
Pension account
Corpus transfer date 31/03/2012 0
Appreciated corpus value as on DoR 3073009
Revised Benefit Benefits as per old scheme Addl Benefit
Corpus from Past scheme (PRBS) 3073009 3679136
Corpus from New Scheme (DCPS) PROJECTED 2116982 0
Corpus from Addl Contribution (PROJECTED) 588743 0
Total Corpus on date of VRS (PROJECTED) 5778734 3679136 2099598
Pension without commutation (Scheme) 43583 27348 16235
1/3 Commutation 1926245 1226379 699866
Balance Pension under Scheme "E" 29056 18232 10824
Sample calculation of total Benefit (DoR Feb 2021) Date of joining ONGC 04/03/1985
Date of joining PRBS Scheme 01/04/1990 5.079452
Date of Closure of PRBS 01/01/2007 16.76438
Reckonable past service (1-PS*1.2/100)*PS
4.7698
Escalated future service till 01.01.2007 (1+F.S. x 0.6/100) x F.S. + 0.0002 x F.S. x F.S. x
F.S.
19.39295865
Total reckonable service as on 01.01.2007 24.1628
Basic on 01.01.2007 61570
PRBS Pension as on date of superannuation 22541
Corpus as on date of superannuation 2988706
Date of Superannuation 28/02/2021
Fund reckoning Date 31/03/2012
Corpus Discount Years 8.92
Discounted corpus value as on31.03.2012 1330110
(Actual corpus to be
transferred to Individual's
Pension account
Corpus transfer date 31/03/2012 0
Appreciated corpus value as on DoR 2753851
Revised Benefit Benefit as per old scheme Addl Benefit
Corpus from Past scheme (PRBS) 2753851 5298762
Corpus from New Scheme (DCPS) (Projected) 6593641 0
Corpus from Addl Contribution (Projected) 2103117 0
Total Corpus on DoR (PROJECTED) 11450609 5298762 6151847
Pension without commutation (Scheme) 86361 39387 46974
1/3 Commutation 3816870 1766254 2050616
Balance Pension under Scheme "E" 57574 26258 31316