Retirement Assure Group Superannuation Scheme (Unit Linked) |
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Most people want a greater control over their finances. Providing employees with this type of power over their hard earned money is an easy & low cost way of enhancing their loyalty to the organization.
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Tata AIG’s Retirement Assure Group Superannuation Scheme (Unit Linked) is designed to provide just that flexibility. The advantages it offers are:
- Retention of quality staff
- Dignified retired life for employees
- Valuable tool that enhances a company's image
- Attract talented new recruits
- Tax benefits to both - employees and employer
Superannuation schemes can be of two types:
Defined Benefit (DB):
This defines the amount of benefit that an employee receives at retirement. A pooled fund is maintained for all members of the scheme.
Upon retirement of a member, the amount required to secure the benefit is drawn from the pooled fund. The pooled fund should achieve the required funding level to enable the employer to meet the benefit obligations.
Defined Contribution (DC):
This defines the annual
contribution that the employer will deposit
into the scheme for each employee. Contributions are usually fixed as a percentage of the employees’ salary. Individual employee accounts reflecting the contributions and the interest accumulations
are maintained. Upon retirement, the individual account is released to provide funds to secure the benefits of the scheme.
Who is eligible?
This is a voluntary scheme where the employer can decide the eligibility criteria.
How does the Unit Linked Plan Structure work?
The fund will be managed on a unitized basis.
Any contribution received will be converted into units based on the fund unit price prevailing at the close of business on the date on which the units are allocated.
The fund value of a member's superannuation account = No. of units of the member * Net Asset Value of the fund.
Twelve Free Fund switches are allowed in each policy year.
Can individual members decide on asset allocation?
Individual members, subject to approval from the Trustees of the Fund, have the flexibility to decide the allocation of their money in the five funds as per the following options based on their risk taking appetite, Members can invest up to a maximum of:
- Upto 100% in Short Term Fixed Income Fund
- Upto 100% in Bond Fund
- Upto 100% in Growth Fund
- Upto 100% in Balanced Fund
- Any combination of the above with a maximum of 60% in Equity Fund
Benefit Payments:
Upon the retirement of the member from employment, on cessation of employment or on death of the member, benefits, subject to the provisions of the company's rules, can be utilised in the following manner:
Upon Retirement:
To provide for payment of the commuted value upto a maximum of one third of the corpus in accordance with the Income Tax Rules, if the member may elects to commute;
And/or to purchase an annuity in
accordance with the Trust Rules/ Policy Contract.
Upon Death:
To provide for payment of annuity/pension on the life of the beneficiary, in accordance with the Trust rules.
Upon Withdrawal:
- To transfer the value of vested benefits to another Superannuation Scheme, if permissible by Trust rules framed by the respective Trustees.
- To retain the value of the vested benefits under the policy and provide for a pension from the normal retirement date to the member or to the beneficiary in the event of death of the member prior to his retirement date.
- To provide for immediate payment of the
pension benefit in accordance with Trust rules as framed by
the company.
Pension Options:
The scheme allows settlement of the retirement benefits through our single premium immediate annuity option (with return of purchase price). Tata AIG Life also offers an Open Market option for purchase of annuity.
As per the request of the policyholder, Tata AIG Life will arrange for the purchase of annuity contracts from any annuity provider approved by Insurance Regulatory and Development Authority (IRDA).
Tax Benefits:
For the employer*:
- Annual contributions are allowed as deductible business expenses u/s 36(1)(iv).
- Maximum contribution that an employer can make is 27% (inclusive of the contribution towards Provident Fund) of employee’s annual salary - Rule 87.
- Interest income on the fund is tax-free u/s 10(25)(iii).
- Fringe Benefit Tax is not payable by a corporate for contributions up to Rs.1,00,000/- per employee.
For the employee*:
- Contributions by the employer are not treated as perquisites u/s 17(2).
- Commuted value upto (1/3rd) on retirement is tax-free u/s 10(13).
- Benefits payables on death are exempt from tax u/s 10(13).
- Employee's contribution, if any, qualifies for tax exemption u/s 80C.
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* Tax laws are subject to amendments thereof and for more details please get in touch with your tax consultant
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Want to know more?
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UIN - 110L049V01 |
