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This presentation provides an overview of the GAIL Employees Superannuation Benefit Fund, including its salient features, implementation in GAIL, and issues for deliberations. It covers the commencement, coverage, management, and payment of benefits. It also discusses the DPE guidelines and their implementation in GAIL, as well as the conversion of the scheme into a Defined Contribution Scheme.
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Welcome to the Presentation on GAIL Employees Superannuation Benefit Fund 19th November 2012
Overview Salient features of GAIL Employees Superannuation Benefit Fund DPE Guidelines Implementation in GAIL Issues for deliberations.
Salient features of GAIL Employees Superannuation Benefit Fund
Salient features of GAIL Employees Superannuation Benefit Fund • Commencement • 1st July 1988 • Coverage • Employees on regular rolls as on 1st July 1988 • Employees joined thereafter • Management of GAIL Employees SBF Trust • Max. No. of Trustees – 12 • 6 representatives of Company - to be nominated by CMD including Head of Finance, who is Secretary to the Trust (as per original scheme, 3 representatives of Company provisioned, which has been changed in the recent past) • 3 representatives of Officers Association • 3 representatives of Employees' Unions
Payment of benefits to beneficiary on superannuation • Annuity purchased from LIC at the time of superannuation • Such annuities shall be payable and paid only in India Employee’s Contribution (i) Variable Contribution(%age of BP + DA)
CONTRIBUTION TO FUND AND BENEFIT Employee Contribution • Fixed amount of Rs 29172 p.a per employee with 5% increase per annum • Employer’s Contribution • Nominal Contribution @Rs.100/- p.a. Calculation of Pension Amount • Maximum pension @50% of last drawn salary on completion of 32 years service.
Calculation of Pension Amount * Trust to decide on availability of corpus
DPE guidelines dated 26.11.2008 & 2.4.2009 • CPSEs would be allowed 30% of Basic Pay plus DA as Superannuation Benefits, which may include Contributory Provident Fund (CPF), Gratuity, Pension and Post Superannuation Medical Benefits. • CPSEs should make their own schemes to manage these funds or operate through Insurance companies on fixed contribution basis. The amount of Pension. Gratuity and Post Retirement Benefits will be decided based on the returns from the schemes to be operated. • Pension and Medical benefits can be extended to those executives, who superannuated from CPSE and have put in minimum of 15 years of service in the CPSE, prior to superannuation. • Any superannuation benefit will be under a “defined contribution scheme” and not under a “defined benefit scheme”. • CPSEs not having superannuation benefits scheme, may develop such scheme and obtain the approval of their Administrative Ministry. However, no other superannuation benefit can be granted out side this 30% ceiling.
DPE guidelines dated 8.7.2009 • Individual CPSEs may create a corpus by contributing not more than 1.5% of PBT, in order to take care of Medical and any other emergency needs of those retired employees, who are not covered by pension scheme and/or post superannuation medical benefit scheme. • Scheme may be framed under following guidelines: • The scheme may be set up where there is a need felt for such a scheme for retired employees of CPSE. • The scheme should take care of medical and any other emergency needs of those retired employees, who are not covered by the Pension scheme and/or post superannuation medical benefit scheme. • A committee of Directors may be constituted by the Board of Directors of each CPSE for disbursement of fund, to the retired employees of the CPSEs, covered under the scheme. The Committee may also identify the areas of medical and any other emergency needs.
DPE guidelines dated 8.7.2009 • In the introductory year of operation of the scheme, not more than 1.5% of previous year’s PBT would be permissible for funding of the scheme. In subsequent years, depending upon the need, contribution to the Corpus, if required, would be made. However, in no case the contribution of the Corpus, in any year will exceed 1.5% of PBT of previous year. • No budgetary support will be provided by the Government for the scheme. • Board of Directors of each CPSE accordingly, may consider, framing of scheme, keeping in view the above guidelines, based on their need and affordability, and submit proposal to the Administrative Ministry/ Department for approval. • Concerned Administrative Ministry/ Department may, with the concurrence of their Financial Advisor, obtain approval of the competent authority for the scheme.
Conversion of GAIL SBF Scheme • In terms of extant DPE guidelines, the Scheme is to be converted into Defined Contribution Scheme (DCS) from Defined Benefit Scheme(DBS). • Since pay revision was effected on 01.01.2007, existing scheme to be converted to DCS on the revised pay. • The accumulation of the existing Scheme will be credited into individual accounts on the day of conversion i.e. 01.01.2007.
GAIL IMPLEMENTATION • Scheme will be applicable for all regular employees on the roll of GAIL as on 01.01.2007 . • 30% of Basic Pay plus DA is being contributed as Superannuation Benefits, includes Contributory Provident Fund (CPF), Gratuity, Pension and Post Superannuation Medical Benefits. • Monthly contribution to be made by the management towards the pension fund would come out of 30% of Basic Pay + DA actually paid after adjusting the contributions made towards PF, Gratuity & PRMS. • The contribution percentage will be arrived based on actuarial valuation at the end of every financial year. • Percentage of contribution calculated for the previous financial year will be applicable for the subsequent financial year. • Pension contribution will be credited to individual account. • Fund managed by LIC and annuity will be purchased for the amount in the credit of the employee on the date of superannuation.
Issues for deliberations Post implementation of DPE guidelines
Issues : • Separation means resignation, Superannuation, Death etc. Can the pension contribution in the credit of employees account be released in case of resignation. • Income tax is deducted on contribution in excess of Rs. 1 lac. Therefore, employees who separate other than by superannuation stake claim on the contribution. • Can service in government/other PSUs be considered for the purpose of reckoning 15 years service. • Admissibility of pension in respect of those who were on the rolls of GAIL prior to 01.01.2007 and superannuating before completion of 15 years service. • How pension is to be regulated for Board members who are on tenure appointment. • How Pension is to be calculated for employees who die in service. • Admissibility of pension in case of employees who are prematurely retired on medical grounds after 50 years of age and voluntary retirement after 55 yrs of age.
