neyveli_lignite_corporation.ppt

PENSION
&
POST RETIREMENT MEDICAL
ASSISTANCE (PRMA)
SCHEMES
FOR
EXECUTIVES & NON UNIONISED SUPERVISORS (NUS)
Neyveli Lignite Corporation
A Navratna – Government of India Enterprise

OBJECTIVES OF PENSION &
PRMA SCHEMES
Old Age income Security
Reasonable standard of
living on retirement
Post Retirement medical
assistance

Scenario in CPSEs before 2007 Pay
Revision Guidelines
 Superannuation Benefits - Contributory Provident
Fund & Gratuity.
 No direct Company Contributory Retiral (3rd) Benefits
 Self Contributory Pension Scheme introduced by few
Progressive PSU’s
 Govt notified Employee Pension Scheme (EPS ‘95) as
part of overall EPF scheme.
 Pension payable under EPS 95 is / was very meagre.

Pay Revision Guidelines dated 26/11/08
and 02/04/2009 of DPE
 With effect from 01-01-2007, CPSEs allowed to
spend up to a maximum of 30% of basic pay
+ Dearness Allowances for employee
superannuation benefits.
 30% Superannuation benefits include
 Provident Fund @ 12% (Statutory)
 Gratuity @4.16% (Statutory) - with a ceiling of
Rs. 10 lakhs and
 Rest Towards Pension & Post Retirement Medical
Benefits

Pay Revision Guidelines dated 26/11/08
and 02/04/2009 of DPE
 CPSEs to have Own schemes to manage Pension / PRMA
funds or operate through Insurance Companies.
 Satisfying criteria of eligibility - minimum of 15 years of
service in the CPSE, prior to superannuation.
 The CPSEs to operate the Pension & PRMA on Defined
contribution basis.
 CPSEs may develop Superannuation Scheme and obtain
approval of their Administrative Ministry.

Superannuation Benefit Schemes in NLC
NLC Contributes 30% of Basic pay + Dearness Allowance
to superannuation schemes in the following Proportion
Provident fund 12.00%
Gratuity 4.16%
Pension 10.00%
Post Retirement Medical
Assistance (PRMA)
3.84%
TOTAL 30.00%

SALIENT FEATURES OF
NLC PENSION SCHEME

Pension scheme for Executives & NUS
COVERAGE All Executives and Non-Unionised Supervisors
SCOPE
Benefits in case of separation on or after 01-01-2007-
on account of Superannuation / Death / Permanent Total
Disablement / Voluntary Retirement .
ELIGIBILITY
15 years of Continuous Service
(total of future service from date of entry into the scheme
reckoned from entry into the scheme up to Normal
Retirement or date of cessation of Service + past service
prior to 01-01-2007 in NLC + service in other CPSE prior
to commencement of service in NLC)
In the event of death or permanent total disablement of
the member, minimum service is not insisted.

Pension Scheme for Executives & NUS
OPERATING MODALITIES
 Management of Scheme
 The scheme is operated by an exempted irrevocable Trust appointed by
the company .
 The Trust operates through fund manager(s) approved by IRDA
 Choice of Annuity option / Annuity Provider is available to the member
 Contributions: 10% of Basic + DA of individual employee paid by the
company to the Trust on monthly basis.
 There is no cross subsidy(contribution) involved
 The Scheme operates purely on Defined Contribution basis.

 Management of Fund:
 The Trust transfers the contributions to the Fund Manager(s) every month.
 The Fund managers maintain a running account in favour of the Trust.
 Fund Managers maintain member wise accumulation and provide
accumulation statement as on 31st March every year.
 Financial Implication:
 @ 10% Basic + DA, the contribution towards Pension for the year 2011-12
worked out to Rs.33.43 Crores for 4238 members.

 BENEFITS
When pension becomes payable - the Fund Manager(s), on the advice of the
Trust, appropriate the accumulation of the Member to the appointed /
empanelled annuity provider(s), based on the choice of the beneficiary
 Member may choose any of the following option on retirement
 Life Annuity
 Life Annuity with Return on Capital
 Joint Life with Annuity
 Joint Life with return on Capital
 In Case of Death, the option is to be exercised by the appointed beneficiary
as per the scheme

Transfer of Accumulation
 Member can transfer the accumulation to another approved fund,
provided he rendered a minimum service of 15 years.
 If less than 15 years of service -
transfer of accumulation to another PSE having similar fund is
allowed only on completion of 15 years of service in CPSE*.
* (the service rendered in NLC + past CPSE service + the service to
be rendered in the newly joined CPSE).

POST RETIREMENT
MEDICAL ASSISTANCE
SCHEME (PRMA) for
post 01/01/2007 Retirees
(Executives & NUS)

PRMA for Executives & Non Unionised
Supervisors of NLC
COVERAGE
Executives and Non-Unionised Supervisors who
got / gets separated from the services of NLC
on or after 01-01-2007
SCOPE
To extend Medical Assistance and Health
Insurance
ELIGIBILITY
Minimum of Continuous Service of
15 years in NLC including past service in CPSE
except in case of death (for Death: 10 years)

PRMA scheme for Executives & NUS
OPERATING MODALITIES
 The scheme is operated by the committee specifically constituted
by the company
 The Committee runs the scheme through Fund Managers /
Insurance providers.
 The Contribution @ 3.84% of Basic + DA received from the
company is transferred to the fund account on monthly basis.
 The premium towards Health Insurance is paid directly to the
insurer & the rest is invested through Fund Managers

PRMA Scheme for Executives & NUS
BENEFITS :Present scale of benefits (based on actuarial
valuation) are
The scale of benefits gets reviewed every three years
depending on fund accumulation and actuarial valuation.
Outpatient treatment for
member and spouse
limited to a maximum of Rs.
20,000/- per annum.
Inpatient / Hospitalization
treatment expense for
member and Spouse
limited to Rs. 4 lakhs per
annum.

DPE GUIDELINES FOR EMPLOYEES RETIRED
PRIOR TO 01-01-2007
Gist of DPE Guidelines dated 08-07-2009
 Individual CPSE may create a corpus with not more than 1.5% of PBT to take
care of medical and other emergency needs of retired executives and those
employees not adequately covered by the pension scheme
 Introductory year & Subsequent years: Not more than 1.5% of PBT of previous
financial year to be funded.
 No budgetary support from Government
 A committee of Directors may be constituted by the Board of each CPSE for
disbursement of fund and to identify areas medical and emergency needs.
 Board of CPSEs to consider framing of scheme with the approval of
Administrative Ministry

DPE GUIDELINES FOR EMPLOYEES RETIRED
PRIOR TO 01-01-2007
Gist of DPE guidelines dated 20-07-2011
 Administrative Ministry / Department may consider creating a common
corpus
 Each CPSE to contribute not more than 1.5% of its PBT to the said corpus.
 Committee headed by Independent Director to be decided by Ministry /
Department to be formed by the Ministry for implementation of the said
corpus.
 Scheme based on individual CPSE as conveyed in O.M dated 08/07/2009 to
continue but within the basic conditions indicated O.M dated 08-07-2009.

DPE GUIDELINES FOR EMPLOYEES
RETIRED PRIOR TO 01-01-2007
Gist of DPE guidelines dated 20-07-2011 contd…
 Contributions towards the Individual CPSE scheme / Common
Corpus Scheme of Ministry together at any year shall not
exceed 1.5% of PBT of previous year.
 The scheme may be implemented through approved insurance
companies.
 Benefits under the scheme may vary from year to year
depending on contribution by CPSE(S), affordability and
sustainability of the CPSE concerned.
 Scheme should not become a defined benefit Pensionary
Scheme.

Post Retirement Medical Assistance in NLC
for pre 01-01-2007 Retirees
 NLC has been operating Post Retirement Medical Assistance Scheme
(PRMA) since 1995.
 COVERAGE:
Scheme covers all Employees of NLC.
 Eligibility:
10 years of service in NLC
 Benefits:
 Outpatient treatment for member and spouse: limited to a maximum of
Rs. 10,000/- per annum.
 Inpatient / Hospitalization treatment expense for member and Spouse:
limited to Rs. 2 lakhs per annum.

Issues to be discussed
 Pre 01-01-2007 retirees pressing to increase in scale of benefits.
 Pre 01-01-2007 retirees Pressing for Pension benefits as well.
 Similar schemes operating if any in other CPSEs.
 As per DPE Guidelines dated 20-07-2011 benefits may vary from
year to year depending on PBT contribution by CPSE,
affordability and sustainability. CPSE may find it difficult to
bring down the scale of benefits once extended. Under such
circumstances – over and above 1.5% contribution?

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