Group Superannuation Insurance Scheme

Group Superannuation Insurance

The majority of organizations offer retirement benefits to their employees, such as NPS (National Pension System), PF (Provident Fund), gratuity, and so on. This enables the employers to gain the confidence of the workforce and keep them around for a longer period of time, in addition to assisting the employees in receiving a pension after retirement.

However, another typical employee retirement benefit is the ‘group superannuation insurance’ scheme. According to some studies, the majority of Indian employees are unaware of the superannuation benefits they are eligible for when they retire from employment. This article will be helpful for readers who are unaware of superannuation benefits as we have covered various aspects of group superannuation plans.

What Is A Group Superannuation Scheme?

The definition of “superannuation” or “superannuate” in the dictionary is to retire due to old age or infirmity. Therefore, a group superannuation scheme is a retirement benefit plan provided by a company to its working class. The plan is established by an organization or an employer for the benefit of its staff.

Features & Benefits Provided By Group Superannuation Scheme

Each plan comes with its own set of features and benefits, and the group superannuation scheme is not an exception. Here are some of them:

  • Good Returns: Since funds are invested meticulously and scientifically under the group superannuation scheme, the possibility of receiving better investment returns increases. This ensures to secure the employee’s long-term financial goals and assists in savings for their retirement years.
  • Budget-Friendly: As the plan allows all the employees in an organization to save each month by bearing a portion of their salary, the employer is not required to bear a significant and hefty cost. Moreover, the plan is budget-friendly for the employees too because the cost is divided among all the employees.
  • Free Look Period: The master policyholder has 15 days from the date of delivery of the policy document to review the terms and conditions. If the master policyholder objects to any of the terms and conditions, he or she has the option to return the policy and provide justification.
  • Multiple Annuity Options: The plan has multiple payout options, including quarterly, monthly, half-yearly, and yearly. One can also purchase annuities that return the premium to nominees in case of unfortunate death, amounts are assured for as long as the nominee lives, or even options to grow in annuity benefits each year.
  • Nomination: Section 39 of the Insurance Act of 1938, as amended from time to time, permits nominations for recipients of the superannuation benefit in the case of a member’s death.
  • Tax Benefits: Since the fund is not a prerequisite for the employee, the employee can leverage the tax benefits for the same. Moreover, the contribution done by the employees towards this insurance scheme is eligible for tax deductions under Section 80 C of the Income Tax Act, 1961. Not only this but also the amount accumulated on maturity and the benefits payable on death are exempted from tax charges.

How Does Group Superannuation Insurance Work?

In a group superannuation plan, the company makes a contribution to the insurance coverage they buy on behalf of every employee. The employer has three options for managing the superannuation fund: using their own trusts, opening an account with one of the authorized insurance firms, or purchasing a superannuation product from an insurance company.

A predetermined portion of the employee’s basic salary and dearness allowance is contributed by the employer. The maximum payment made by employers to employee group superannuation plans is typically 15% of the employee’s basic wage and dearness allowance. Although the company makes contributions to group superannuation, they are included in the employee’s CTC.

The employees have the choice to freely make a contribution to the superannuation fund in addition to the employer’s contribution. This contribution is only permitted, though, if the company has a defined contribution plan. Up to one-third of the accumulated corpus may be withdrawn in a lump payment at retirement, with the balance being used to fund a pension. As a result, the employee can control his expenses more effectively and continue to receive a steady income stream even after retirement.

What’s The Claim Process Of Group Superannuation Insurance Scheme?

Since the superannuation insurance scheme is managed by the employer, the claims can only be made in the below-mentioned scenarios:

  • In case the employee discontinues working or retires: They have the option to either withdraw 1/3rd of the accumulated wealth or receive the rest of the amount as pension or retirement.
  • In case the employee, unfortunately, dies during the service period: The accumulated fund will be given to the nominee of the employee.
  • In case the employee changes his job: The employee can:
  • Transfer the accumulated fund to the new employer
  • Withdraw 1/3rd of the accumulated wealth or receive the rest of the amount as pension or retirement.
  • Continue using the same scheme for wealth accumulation till they retire.

Documents Required For Claiming Against Group Superannuation Insurance Scheme

Below are some of the most important documents that one should keep while raising a claim against the plan:

  • Original policy document
  • Duly filled and signed claim form
  • Proof of claimant’s identity
  • Death certificate – in case of the insured’s death
  • NEFT mandate for the claimant (in case of direct transfer of money to the account).

Tips For Choosing The Right Group Superannuation Plan

With so many insurance companies in the market, it may become tough to choose the right one for purchasing a group superannuation plan. Therefore, here are some tips and tricks for the same.

  • Choose a group superannuation plan that has the capability to offer inflation-beating returns.
  • Choose a superannuation scheme that includes top-quality funds for gaining maximum returns on the investment.
  • Make sure that the fund portfolios are diversified.
  • Opt for a plan that provides flexibility in choosing schemes as per the needs.

Frequently Asked Questions

Here are some of the frequently asked questions that you must know.

Yes. To diversify your portfolio and build a sizable corpus to meet your obligations to your workers, you can engage in a number of superannuation plans.

According to the Income Tax Act of 1961, the superannuation program benefits both employers and workers in terms of tax savings. The organization’s superannuation pension plan must have the Commissioner of Income Tax’s approval in order to be qualified for these superannuation benefits.

Yes. The amount that your employer has put aside for your retirement must be disclosed on your payslip.

Retirement is the term used to describe when an employee leaves work permanently. When an employee retires to a job that pays pensions, it is known as superannuation.