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Pension
and Group Schemes
Group
Superannuating schemes (GS)
The
Superannuation Scheme is designed to take care of employees after retirement.
The object of the scheme is to provide pension to an employee from the
date of his retirement so that he can maintain a reasonable standard of living
after retirement. Pension may be paid for life or for a guaranteed period and
thereafter for life or for life with return of corpus.
Pension can be arrange to be paid during the joint life the employees and
his wife and to the survivor after the death of one of them.
Approval
of Superannuation Fund
The provisions regarding approved Superannuation schemes are set out in Part
‘B’ of the Fourth Schedule to the Income Tax Act 1961.
It
may be noted here that the Income-Tax act has placed a restriction on the amount
of annual contributions payable by the employer viz. 25% of salary minus
contributions towards PF and not on the amount of pension.
It
is possible to arrange a Group Insurance Scheme in conjunction with a Superannuation
scheme so that both the eventualities of death during service and retirement are
provided for.
This is however subject to the condition that the minimum membership is
10 or more.
The group Insurance scheme can be allowed is 2 months salary for each
year of outstanding service subject to a maximum of 30 month’s salary or
Rs.2,00,000 whichever is less.
Benefits
of commutation of Annuity or pension on retirement or death while in service
under approved Superannuation scheme are available to the extent of 1/3rd
if Gratuity is payable to the employee and ½ if he is not to receive the
gratuity and such commuted value in lump sum before annuity commences.
Benefits
of the Superannuation Scheme
In addition to the tax
benefits, the following are the other advantages with the Superannuation Scheme
in operation :
Introduction
Advantages
to Employer / Advantages
to the Employee
Pension Options
Types
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