Overview of Retirement and Social
Security Benefits
Presented By: Jehangir Daruvalla
Summary
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Statutory Benefits
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Non –Statutory Benefits – Insurance
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Provident Fund
Employee Deposit Link Insurance (EDLI)
Statutory Gratuity
Employee state Insurance scheme (ESIC)
Group Medical Insurance & Accident insurance
Group Life insurance
Self funded Parental Medical insurance
Non –Statutory Benefits – Other
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Company Lease accommodation (CLA)
Personal Lease accommodation for Deposit on Housing.
Employee stock purchase program (ESPP)
Long Service Award
Health and Well Being
Provident Fund
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12% of basic salary deducted from employee and equivalent contribution made by
employer
From employer’s contribution (12% of basics) 8.33% of basic or INR 541 whichever
is less is diverted towards Employee’s Pension Scheme
Provision for voluntary contribution for employee (VPF)
Interest is paid on monthly running balance on employee and employer contribution,
as per prescribed rate by RPFC office (current year proposed at 9.5%)
Provision for partial withdrawal benefits (PF NRL) for various purposes (House
purchase / Construction of house etc) as per PF rules.
Provision for withdrawal of PF dues upon leaving the firm, provided that member
remains unemployed for more than 60 days, however the amount is taxable if
contributing PF membership is less than 5 years
Provision for transfer of PF dues from previous employer to new employer by
submitting From No.13 to get the continuity in PF membership
Employees Deposit Linked Insurance
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Employees Deposit Link Insurance (EDLI) is part of PF benefit that provide Life
insurance coverage up to a sum of Rs 1.00 lac in case of death of an employee while
in employment, the EDLI amount is paid to the Nominee as per PF form No 2 details.
Under PF rules employer’s have the option to apply for Exemption from Govt. EDLI
scheme, if they obtain an EDLI policy from a private Insurance Company in lieu of
Govt. EDLI scheme . One of the condition laid down by RPFC is that the benefits
provided under private Insurance policy needs to be at par or better then the Govt.
EDLI scheme.
Statutory Gratuity
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On completion of 5 years of continuous service an employee will be eligible for
gratuity on retirement, resignation or disablement due to accident or disease.
Gratuity is also paid on death due to accident or disease, while in service, to the preappointed nominee, in such case completion of 5 years of service shall not be
necessary
Gratuity payable to an employee will be calculated at 15 days basic salary for each
completed year of service, based on the last drawn basic salary with max. cap of INR
10 Lacs
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i.e. Last Basic salary / 26 * 15 days * Years of service = Gratuity payment
In order to avail tax benefits on gratuity provisions in the books of account, generally
Corporate form a Income tax approved Gratuity Fund Trust. The corpus of the Trust
Fund can be managed by Insurance Co. or by the internal Gratuity Trust created as
approved under Income tax rules.
Employees State Insurance Scheme
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ESIC is deducted on ESIC salary* the current limit is less than or equal to Rs 15,000/per month (*ESIC salary = Basic + HRA + Special Allowance + Conveyance + Shift
Allowance + any allowance that is paid on monthly basis) excludes bonus & leave
salary.
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Employer to contribute @ 4.75% of the ESIC salary
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Employees to contribute @ 1.75% of their ESIC salary
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Employee can avail medical benefits through ESIC dispensary or hospital for self and
his immediate family members enrolled under the plan
Employee once covered under ESIC, needs to contribute till the end of contribution
period (April to Sep and Oct to March)
The due date for payment of ESI contribution is 21st of the next month for current
month deductions
Group Mediclaim & Accident Insurance
Mediclaim Insurance:
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The policy covers for reimbursement of hospitalization expenses incurred by
employees for self and their dependents ( similar to Mediclaim policy available in the
market)
The sum insured depends on the Company policy and family floaters are also
available in the market.
Generally dependents include spouse and up to 2 children (below 21 years of age) or
certain corporate even cover employee parents.
As per current IRDA rules medical insurance only covers Hospitalization expenses
within India
The policy may have provision for cashless facility
Accident Insurance:
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This policy provides insurance cover for accidental deaths and generally covers
employees only. The coverage amount depends as per the corporate policy taken
with the insurance Company.
In the event of an accident (at work or otherwise) leading to permanent / temporary
disability, certain disability amount is also paid by insurance company to the
employee.
Group Life Insurance
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Under this policy employees are provided Life Insurance cover up to a specified
coverage amount in the event of unforeseen death (while at work or otherwise), the
amount is paid to nominee of the employee.
Self Funded Parental Medical Insurance
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Recently few corporate have made a tie up with Insurance companies to help it’s
employees to obtain a self funded insurance cover for its parents and in-laws , with
the sole intention to help employees cover their dear ones as such policies are not
easily available in the market
The enrollment will be at the discretion of the employee if he intends to cover his
parents.
The premium is upfront paid by the corporate to the insurance company and later
recovered through payroll in installments.
As the amount is paid by the employee he is eligible to claim tax rebates as per
Income tax rules.
Company Lease Accommodation (CLA)
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Certain Corporate support its employee’s by providing housing assistance in the form
of Company Lease Accommodation in lieu of House Rent Allowance (HRA).
Company generally outsource this work to a broker as its requires skill handling of
CLA case with landlord and regulators.
Company pays in advance security deposit and quarterly advance rent cheques to
landlord
Minimum duration of the lease is generally 24 months
The organization will bear brokerage equivalent to, maximum of 1 month’s rent, at
the start of the lease.
Personal Lease Accommodation
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The policy supports outstation employees getting relocated, in the form of Depository
Assistance for Personal Lease.
The Deposit benefit is generally provided to the employees in the form of a repayable
loan through a designated Bank after submission of required documents
The amount extended as Depository Assistance is recovered in EMIs starting from the
month in which the payment has been disbursed to the employees from his salary
The brokerage amount is reimbursed by employer through payroll on actual and is
subject to Income Tax
Generally, Corporate put a duration cap of 3 month from joining or relocation date to
avail this kind of benefit. Thereafter employee has to manage on their own for
personal accommodation.
ESOPs
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Typically, ESOPs are distributed to retain employee talent by Corporate.
Employees are granted specific number of shares, which becomes exercisable upon
attaining certain price or after specified period as defined in the plan document from
date of grant which ever is earlier.
Upon Sale / Vesting of shares, net proceeds after recovery of appropriate Income tax
the net amount is paid to the employee
Employee is eligible to receive dividend on unvested stocks during restriction period
which is paid through payroll as taxable income as per plan document.
Health & Well Being
Long Service Appreciation Awards
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In order to acknowledge long and continuous service put in by employee’s, generally
Corporate appreciate by providing long service awards in the form of valuable gift to
its employee’s on completion of 5 / 10 years of service.
Annual Health Check Ups
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To manage high level stress under current work environment, Corporate are
encouraging its employees to undergo periodical medical check through a tie-up with
a designated clinic / hospitals
This benefit is generally for employees only and some times reasonable concessions
are provided to family members for such check-up
Thank You