The superannuation fund benefit is provided by the employer to their employees. This is a retirement benefit which is made part of employee CTC. While EPF is well known to most of the employees, superannuation benefit is less known about how it operates and how one can withdraw during resignation or retirement. What is Superannuation Fund in India? What are frequently asked questions (FAQs) on Superannuation Fund Benefit that employees should be aware?
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Superannuation Fund Benefit – Frequently Asked Questions (FAQs)
Here are some of the frequently asked questions. If you are an employee and Superannuation Fund benefit is part of your CTC, you should go through them.
1) What is Superannuation Fund?
Superannuation fund is a retirement benefit provided by the employer to the employee. The employer would make contributions to the superannuation fund scheme either monthly or yearly. Generally, employers would take the group superannuation scheme and such scheme is offered by most of the insurance companies in India.
2) How would I know whether I am eligible for Superannuation benefit?
Employees can check their CTC break-up. Under retiral benefits, if you see superannuation along with some allocated amount, then you are eligible and would be getting superannuation contribution to your account.
3) Do we have a Superannuation account number like the EPF UAN number?
Companies would take the group superannuation scheme from insurance companies. These companies would allot a policy number to employees. You can reach your company payroll department to know more about this policy number.
4) Where can I check my superannuation fund balance?
You need to know the insurance company who is offering such group superannuation scheme + Policy number to know the balance. You can get these details from your company payroll division. Once you have it, you can mail the insurance company for login and password details from your official mail ID. Once you get login details, you can login to insurance company porta and check your superannuation fund balance. This amount is all accumulated amounts + interest / returns from such schemes.
5) What are various types of Superannuation Benefits?
There are 2 types of super-annuation fund benefits:
A) Defined benefit plans: The benefits to be received at the retirement are already known to the employee and it is fixed on the basis of their rank service and final salary. So, the risk of generating such benefits is entirely on the employer.
B) Defined contribution plans: These schemes are better to manage as the employee and employer directly correlate it with the contributions made. The scheme defines the contribution of both and leaves the outcome to the market forces. Most of the plans existing today are defined contribution plans. Here, the risk factor is attached to the employee, as he is not aware of the amount he is going to receive at the time of retirement.
6) How Superannuation benefit is calculated?
This answer would surprise you. Whatever is there in your superannuation category in the CTC is sometimes NOT invested in your superannuation fund. The superannuation computation is done on the following methodology.
a) Less than 1 year of service – NIL.
b) 1 to 2 years of service – 50% of contribution + interest received from the fund.
c) 2 to 3 years of service – 75% of contribution + interest received from the fund.
d) 3+ years of service-100% of contribution + interest received from the fund.
Means if you work for 1 to 3 years, you would get partial superannuation amounts though such amount is part of your CTC.
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7) What happens to Superannuation fund when I resign and move to another company?
When you resign and move to another company, you need to keep track of such superannuation benefits till you either retire or till you take action to move to NPS or withdraw. If employees change jobs frequently, tracking superannuation funds would be a painful process as there could be several such superannuation schemes in employee name.
8) When can I withdraw Superannuation fund in India?
Employees can withdraw / transfer superannuation in below scenarios:
a) In case of death of the employee, either the nominee or family members can withdrawal superannuation fund.
b) Employee can withdraw superannuation in case of resignation and moving to another job.
3) Employee can withdraw after retirement.
4) Employee can transfer superannuation fund Tier-1 NPS on resignation.
9) Can I withdraw 100% Superannuation Fund?
No. There are two options available for employees.
1) Lump sum withdrawal
2) Get annuity pension payment.
These options would depend on whether you are eligible for a gratuity of not. See the next section about it.
10) How to withdraw Superannuation fund in India?
If an employee is NOT eligible for gratuity, they can do lump sum withdrawal up to 50%, otherwise, it they can withdraw only 33% of the superannuation balance.
Balance amount needs to be withdrawn by way of purchasing an annuity option. You can refer more info here at how to withdraw superannuation fund.
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For a new entrant with both options, which is better to take and why: NPS vs SuperAnnuation plan ?
In simple terms, NPS is in your control and you can monitor without any intervention irrespective in which company you are working. In case of Superannuation it is little complicated and you need to depend on your insurance company / employer to track it. If you switch jobs, it is nightmare.
Thanks for the detailed information about superannuation.
I have contributed for Superannuation fund for couple of year and in 2017 stopped the contribution. Still I am in same company and my Superannuation funds are with LIC.
Can I transfer my superannuation to my NPS1 account or should I wait until I resign from my current organization.
Anil, Since you stopped superannuation contribution, in case you don’t have plans to add them in future, you can move these funds to NPS Tier-1. You would not get any additional benefits of continuing in superannuation fund except that it would be managed by LIC. If you move to Tier-1 NPS, you can choose the asset allocation and you can choose the insurance company. You can can track how these funds are performing on regular basis.
Suresh, Thanks for superfast response 🙂
Please let me know the procedure to transfer the superannuation fund to Tier 1 NPS account.
Hi Anil, You need to approach your employer and provide them your NPS PRAN account number. There is set of documentation they need to do (which you need to fill) and then the transfer would get affected. I have done this personally for myself few months back
I agree with Mr.Kamal Garg. We cannot withdraw 50% of corpus even if eligible for gratuity. Also interest rate is fixed based on retirement date and not during start of policy. Also we are not able to take the same service providers conventional policy like deferred annuity. Forced to take 5.4% return. Request to check the rules for withdrawal so that we can talk to our organisation on this topic.
All the details are already indicated in the article Sivaraman. This is sufficient for any one to talk to their employer
Request clarity on this topic on below questions. Sport to bother
1. I’m eligible for gratuity. But my employer says only one third can be withdrawn
2. Forced to utilize annuity with LIC alone that too on current rate of interest. Can I say will look for better alternative on my own like NPS or to choose options like deffered plans with LIC instead of accepting immediate forced annuity
Sivaraman, Are you talking about gratuity or superannuation? Your message says gratuity. When you have worked for 5+ years in a company and resign and move out, you would get 100% of eligible gratuity and not 1/3rd.
I’m talking about Annuity from NPS can be with only 1/3rd of corpus
Looks there was a typo error. I just updated.
“If an employee is NOT eligible for gratuity, they can do lump sum withdrawal up to 50%, otherwise, they can withdraw only 33% of the superannuation balance”.
The biggest problem with a Superannuation Fund is that one has to compulsorily take an annuity from an insurance company and that’s where you get a very meagre and sub-optimal return out of the corpus lying at the time of retirement. One can only take 1/3rd amount as tax free commutation and balance 2/3rd is compulsorily converted into an annuity where you get a total return (option of monthly annuity payout subsuming your basic corpus amount) of around 8% (at annuity starting age of 60 years) and if you opt for repayment of corpus amount after one’s death then the annuity would be around 5%.
This is the problem with all these annuity models which are favouring insurance companies and not the annuitant.
Thanks for your comments kamalji. This benefit is provided by employer to employees. Employees don’t have choice to reject as it is mandatory from employer unless it made as a choice which is not the case. There is very limited info about superannuation and I keep getting several queries for each and every small thing. This post should help all those employees who are struggling about their Superannuation fund. From returns point of view, I agree, these are with insurance companies and meagerly one can get any good returns.