Pension Pension SchemeScheme

• A pension is  a  fixed  sum  to be paid  regularly  to a person, typically following retirement from service.

• The  terms  retirement  plan  and  superannuation  refer  to  a pension granted upon retirement of the individual.

• The National Pension System (NPS) is  a  defined-contribution-based  pension  system  launched  by the Government of India with effect from 1 January 2004.

• Like most other developing countries, India did not have a universal  social-security  system  to  protect  the  elderly against economic deprivation

• Unlike  existing pension fund  of  the  Government  of  India that offered assured benefits, NPS has defined contribution and individuals can decide where to invest their money

• The scheme is structured into two tiers :   Tier-I account: This  NPS  account  does  not  allow  premature 

withdrawal and is available to all citizens from 1 May 2009. Tier-II account: This  NPS  account  permits  withdrawal  for 

exceptional reasons only, prior to the retirement age.

Regulation

• The Pension  Fund  Regulatory  and  Development Authority (PFRDA)  was  established  by  the Government of India on 23 August 2003.

• To  promote  old  age  income  security  by  establishing, developing  and  regulating pension  funds and  is  the prudential  regulator  for  the  NPS  for  the  past  11  years, covering  95 Lakh  subscribers  from Central Government and State Governments.

Eligibility• NPS is open to all citizens of India on voluntary basis and is

mandatory for employees of central government (except armed forces) appointed on or after 1 January 2004

• Citizens between the age of 18 and 55 can join the NPS

• Tier-I :- Mandatory for all government servants joining government

service on or after 1 January 2004

Government servants will have to make contribution of 10%

of his Basic Pay and D.A which will be deducted from his

salary

Government will make an equal contribution No contribution from government in case of non –

government employees

• Tier – II :-

Each individual can have a voluntary withdrawable account

Government makes no contribution into this account

accumulations in this account can be withdrawn anytime without assigning any reason

Contribution Guidelines• PFRDA has set the following guidelines with regard to

subscriber contribution :

Minimum amount per contribution: Rs. 40 per monthMinimum number of contributions: 1 in a yearMinimum annual contribution: Rs 6,000 in each subscriber

account.

o If subscriber is unable to contribute the minimum contribution, a penalty of Rs.100 per year of default

o For re-activation of account, subscriber has to pay the minimum contribution, along with penalty due

Withdrawal Norms

Exit Before 60 years of age

In case of VRS, they have to invest 80% of accumulated saving to purchase a life annuity from Insurance Regulatory and Development Authority (IRDA)

Remaining 20% eligible for withdrawal as a lump sum

Exit After 60 years of age

Subscriber is required to invest at least 40% of pension wealth to purchase an annuity

Remaining 60% paid in lump sum

No exit till 70 Years of age

Account is closed and the benefits are transferred to subscriber bank account with F&F settlement

In case of death the nominee will receive the entire amount in lumpsum

Pension Form

Employees’ State Employees’ State Insurance Insurance Corporation (ESIC)Corporation (ESIC)

• It is a self-financing social security and health insurance scheme for Indian workers.

• For all employees earning Rs.15000 or less per month as wages.

• Total Share 6.5 % Employer Contribution – 4.75 % Employee Contribution – 1.75 %

• This fund is managed by the ESI Corporation (ESIC) according to rules and regulations stipulated there in the ESI Act 1948

Benefits

• Two types of benefits

(i) Medical Benefits

(ii) Cash Benefits

Employees entitled for medical treatment for self and dependent, Unemployment cash benefits and maternity benefit in case of women

Super special treatment through private tie up network as well as through its own super speciality hospital situated throughout India

ESIC is also constructing Medical and PG Medical, Dental Colleges in which it has set aside certain percentage of seats for children of Insured Persons.

Dependent Benefit up to ceiling of Rs.1200 for all eligible dependants of a deceased person.

Total of 1398 ESIC Dispensaries, 1678 empanelled private medical practitioners, 145 ESIC Hospitals, total of 19387 beds available for ESIC insured person.

ESIC Form 7b