How to withdraw Superannuation Fund in India?

How to withdraw Superannuation Fund in IndiaHow to withdraw Superannuation Fund in India?


Superannuation fund is a retirement benefit provided by employer to employee. This is like EPF, however, the contribution from the only employer side is done. Many corporates have incorporated superannuation fund benefit as part of employee CTC. However, many employees might forget about such benefit during a change in jobs. Some would have moved from job to business and they would have either forgotten it or they don’t have any clue how to withdraw superannuation fund. What is Superannuation fund? How to withdraw Superannuation Fund in India? What are various options available to an employee to withdraw / transfer such superannuation scheme?

Also Read: How an employee can calculate gratuity on their own?

What is Superannuation Fund?

These days, many corporates are offering the superannuation benefit, but there is limited information available over internet about some painful areas in it. If you search google, you would find superannuation fund details of Australia and not in India. So even Google has no clue about such complicated scheme. Superannuation is a retirement benefit provided by the employer to the employee. If this is part of your CTC break-up, then the employer should make contributions to your superannuation fund scheme either month on month or year on year. Generally, companies take Group Superannuation Scheme from any of the approved insurance companies like LIC, ICICI Life insurance, etc. The returns of the superannuation fund may differ according to the company providing the policy.

The employer keeps making contributions to the employee superannuation scheme year on year as long as the employee is with the company. Either on retirement or post resignation, the employee would have the option of buying a superannuation-linked pension from any insurance company. This need not be with the same insurance company where the superannuation fund is contributed.

Refer Superannuation fund scheme guide for more info.

When can employee withdraw superannuation fund in India?

Withdrawal of superannuation fund can happen in a few instances like

1) Death of the employee. In this case, either nominee or family members would make the withdrawal claim of superannuation fund.

2) Withdrawal possible when an employee changes the job. It is irrespective whether the new employer is providing superannuation benefit or not.

3) Withdrawal on the retirement of the employee.

4) Transfer superannuation fund benefit amount to NPS (Tier-1) in case employee resignation (this is movement and not withdrawal).

How to withdraw Superannuation Fund in India?

I am providing these details based on my recent personal experience, hence I feel these are accurate, but one need to recheck before they proceed in the superannuation withdrawal process.

There are two options available for employee.

1) Employee is allowed for commutation i.e. lump sum withdrawal

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Superannuation Fund Benefit – Frequently Asked Questions (FAQs)

2) Employee is allowed to get annuity pension payment.

I) Superannuation withdrawal rules for commutation (Lumpsum withdrawal)

(i) Lump sum withdrawal up to 33% of a superannuation fund, if employee is eligible to receive a gratuity. The employee would be eligible for gratuity only if he works for 5+  years in the same company.

(ii) Lump sum withdrawal up to 50% of a superannuation fund, if employee is NOT eligible to receive a gratuity. Employee would NOT be eligible for gratuity if he has moved out of the company within 5 years.

e.g. if the employee worked for 5.5 years in the company and has superannuation fund accumulated value of Rs 10 Lakhs including interest. They would be eligible to take 33% i.e. Rs 3.3 Lakhs in lumpsum withdrawal option.

II) Superannuation withdrawal rules for Annuity Pension Payment

Once an employee chooses commutation option, the balance would be considered for annuity pension payment. In the above example, Rs 6.7 Lakhs would be paid through annuity pension payment option. One can consider any of the below options for this annuity pension scheme. These scheme details look more or less like annuity pension schemes offered by insurance companies. The details may slightly vary between the insurance companies, hence one need to check before opting them.

1) Life Annuity:  This option pays annuity for life.

2) Life Annuity with an annual increase of 5%: This annuity pension option pays annuity for life. Annuity payout increases at a simple rate of 5% for each complete policy year throughout the life of the annuitant.

3) Life Annuity with Return of Balance Purchase Price: This option pays you annuity for life and on death, the Balance Purchase Price is returned to your nominee. Balance Purchase price will be equal to Purchase Price (premium paid by you in the beginning excluding taxes) less sum total of the annuities paid.  If the balance is negative, then no benefit will be payable on death.

4) Life Annuity with Return of Purchase Price: This annuity option pays annuity for life and on death the purchase price is returned to the nominee.

5) Life Annuity with Return of 50% Purchase Price: Under this annuity option, annuity is paid for life and on death, 50% of the Purchase Price is returned to your nominee.

6) Life Annuity with Return of 75% Purchase Price: This option pays you annuity for life and on death, 75% of the Purchase Price is returned to your nominee.

7) Life Annuity guaranteed for 5, 10, 15 years and payable for life thereafter: This option pays annuity for a guaranteed period of 5, 10 or 15 years (as chosen by annuitant), and life thereafter. In case of demise during the guaranteed period, annuity for the remaining guaranteed period will be paid to the nominee.

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Superannuation Fund Benefit – Frequently Asked Questions (FAQs)

8) Life Annuity with return of Purchase Price on Critical illness (CI) or Permanent Disability due to accident (PD) or Death: This option pays you annuity till earlier of first occurrence of any of the 7 specified CI after policy inception or PD, before the age of 80 years, or death. Further, the Purchase Price is returned to annuitant/nominee, in case of first occurrence of any of the 7 specified CI or PD before the age of 80 years, or death.

9) Joint Life Last Survivor without Return of Purchase Price: This option pays annuity for life and on death the annuity continues for the life of the named spouse. Where the named spouse has pre-deceased or where the named spouse is no longer a legal spouse at the time of annuitant demise, no further benefits are payable.

Also Read: LIC Jeevan VII Annuity Scheme provides regular pension – Should you opt?

10) Joint Life Last Survivor with Return of Purchase Price: This option pays you annuity for life and on death the annuity continues for the life of the named spouse. On the demise of the last survivor the Purchase Price is returned to your nominee. Where the named spouse is no longer a legal spouse at the time of your demise, no benefits shall be payable except the Return of Purchase Price to the nominee.

11) Joint Life, Last Survivor with Return of Purchase Price in parts: In this option annuity is paid to you for life and thereafter your spouse for his/her life. On the earlier of either your or your spouse’s demise, 50% of the Purchase Price is returned to the survivor (annuitant / annuitant spouse). After the death of the last survivor balance 50% of the Purchase Price, is returned to the nominee.

Where a named spouse is no longer a legal spouse at the time of annuitant demise, 100% of the Purchase Price shall be returned to the nominee and no further benefits are payable.

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Suresh KP

24 comments

  • Anil Kumar

    Dear Suresh, Thanks for taking effort to publish this. Very useful to novices like me without much knowledge with Tax and Pension systems.

    Would request your valuable advice in the below. Kindly suggest best options here:

    Thanks in advance !

    1. I am resigning my job with an MNC in India after 19 years and moving to UK.
    2. I am 50+ and do not have plans to work for an Indian company
    3. I do not have opted for NPS, or not planning to explore further.
    4. Would like to have immediate maximum lumpsum payment as my retirement plans will be in UK

    My Superannuation fund is managed through ICICI Prudent Life and I see the below options:

    A. Select Appropriate Options below:

    a. 2/3 of value of units to be utilized for immediate pension thru iciciprulife, 1/3 of value units to be paid in lumpsum (commutation)
    b. 1/2 of value of units to be utilized for immediate pension thru iciciprulife, 1/2 of value units to be paid in lumpsum (commutation)
    c. 100% of value of units to be utilized for immediate pension thru iciciprulife

    B. Details for Immediate Pension (asking for bank Account Details etc.)

    C. Annuity Payments
    – Frequency of Payments (Monthly, Quarterly etc.)
    – Annuity Options (Life Annuity, Life Annuity for 5 years and life thereafter etc.)
    – Bank account details

    • In superannuation (like NPS), you cannot take 100% withdrawal. You can take lumpsum as indicated by you and balance take a pension plan. This is biggest drawback of NPS or superannuation plan. I would recommend you convert this from superannuation to NPS

      1) You can open NRE/NRO and provide this bank for pension plan. 2) In case of NRE account, you can repatriate the funds from your Indian NRE bank account to UK bank account (where you are planning to retire)

      you can do this process directly with superannuation too, but pls talk to ICICI Life insurance before you proceed as I heard the process is more complex. If it simpler, you can directly take pension from superannuation fund directly to NRE account

      • Anil Kumar

        Thanks Suresh for the detailed suggestions. Really appreciate it…

        1. I assume I can opt for ‘1/3 of value units to be paid in lumpsum (commutation) only’ – as I completed 5+ years in the company I am leaving. Or can I opt for 2/3rd as lumpsum?

        2. Since I still have India Bank Account active. Also NRE/NRO accounts. I am a bit concerned with complexities of transfer to NPS etc. I will keep the balance with ICICIPrulife itself and opt for Quarterly payments. Will that be ok ?

        • 1) Check the rule, it is only 1/3d 2) You can opt for pension plan. In case you don’t want pension now, you can move to NPS and then it is under your control, instead of retaining in superannuation fund which would be in MESS.

  • MS

    Hi Suresh, I worked for a company based out of India and have been living in US for a while now and I have settled here. My Superannuation fund is still with my organization. Since I do not pay Tax in India, what are my options to withdraw. Are there other options (not annuity based) available for people who do not have Indian citizenship any more?

    Request your advise.

    • Hello Ms, There are no separate guidelines for NRIs. You can approach the company where you had superannuation and consider taking an annuity / Transfer this to NPS Tier-1 and later take annuity.

  • Nailesh Sachde

    Hi Suresh,

    I am working in a company for more than 7 years, and have opted to pay monthly contribution, which I paid for around 4 years. I am still working with same company but got assignment outside India so have been moved to different country payroll, and therefore, my contribution is discontinued since last year. In past, I had registered myself on LIC website, where my company has group policy, but as of now, i don’t see that online. (https://customer.onlinelic.in/GroupPensionUser.htm is down) I do have my policy number and my company website is showing funds for my policy. Can I request your help to know the way to transfer my superannuation fund to my NPS account? Can i get that transferred before my retirement or resignation ? Please provide your guidance. Thanks

    • Nailesh, I have personally transferred my superannuation fund to NPS. There are certain conditions for that. It can be done when one has resigned / during retirement. Since my company has taken over by some other company, there was an option for me to move it. But in your case since you moved to onsite there could be an option, but I am not sure.
      1) Pls talk to your company payroll whether you can transfer superannuation to NPS (as you moved to onsite and there are no contributions now in SA).
      2) If yes, you need to check with your NPS point of contact (e.g. for me I Opened in ICICIdirect and they are my contacts) and ask for documentation. The process is tedious, but it is one time
      3) Once you fill the documents, get it signed with your payroll, you need to share with NPS team
      4) They would verify and confirm
      5) You can ask your payroll team to transfer superannuation fund to your NPS account
      6) This would take 3 to 5 working days post all confirmations by both these teams

      This is tedious job, but still I have another 14+ years for retirement, I don’t want someone to control my funds. NPS is in my control, hence this step helped me to track it.

      Pls let me know if any of the above steps helped you or you had any additional steps to be done

  • satish

    Thanks for valuable information. If we retain the amount in superannuation fund after change in job. what happens to the amount? will interest be paid and amount accumulated till retirement age?

    • Hello Satish, The insurance company (where your superannuation fund) is accumulated would keep investing based on their investment objective (e.g. like NPS). This would continue to earn returns though not guaranteed till you convert them into pension plan / withdraw.

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