Ppt of global worming

1. DPE WORKSHOP on PENSION -19-11-2012-HYDERABAD 1
Welcome
Proposed Pension Scheme of NTPC

2. Plan of presentation
 Salient features of the Pension Scheme
 Status of Implementation
 Issues of concern
 Way forward
DPE WORKSHOP on PENSION -19-11-2012-HYDERABAD 2

3. Salient features of the Pension Scheme
 Nature of the Scheme: Defined Contribution Scheme.
 Contributions are defined in advance
 Benefits depend upon accumulated corpus
 No cross subsidy, individual member pension account.
 Effective Date: 01/01/2007
 Coverage: All employees on regular rolls of NTPC as on 01/01/2007 &
employees joining thereafter.
 Mandatory or Optional: Mandatory
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4. Salient features of the Pension Scheme
 Administration of the Scheme: By a separate Pension Trust
recognized as approved superannuation fund under IT Act,
Trustees nominated by both management and employees.
 Pension payment : In the form of pension annuity from
annuity service provider-LIC of India.
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5. Contribution Structure
 Company Contribution: Within 30% of (Basic Pay + DA)
as stipulated for all superannuation benefits i.e CPF,
Gratuity, PRMS & Pension.
 After paying for CPF, Gratuity and PRMS, exact rate of
company contribution for Pension shall be notified
annually.
 Contribution for Gratuity and PRMS shall be taken as per
actuarial valuation.
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6. Contribution Structure
 Mandatory member’s Contribution: 1% of (Basic Pay +
DA)
 Voluntary Contribution: Option to make voluntary
contribution by member
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7. Members Account
 Just like CPF- individual member Pension account shall
be maintained.
 Contribution made by Company and Member shall be
credited in individual member pension account.
 Interest earned by Trust on investment of Fund shall be
credited to individual member account at the end of the
year.
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8. DPE WORKSHOP on PENSION -19-11-2012-HYDERABAD 8
Qualifying service & Eligibility for Pension
Qualifying service: Minimum 15 years in NTPC or any
other CPSE prior to joining NTPC, before Superannuation
Eligibility for Pension on :
 Superannuation
 Death while in service*
 Total Permanent disablement*
 VRS/VSS
(* - minimum service of 15 yrs not applicable in case of death
and total permanent disablement).

9. DPE WORKSHOP on PENSION -19-11-2012-HYDERABAD 9
Pension Benefits
 Minimum Pension: Under DC scheme there is no
minimum assured pension.
 Quantum of Pension: Will depends upon
accumulated corpus in the member account at the time
of separation and the then prevailing annuity rates and
annuity options of annuity service provider.

10. DPE WORKSHOP on PENSION -19-11-2012-HYDERABAD 10
Mode of Pension Payment
 In the form of pension annuity from LIC of India.
 Member to have option to choose any of the annuity
option of LIC of India.- LIC Pension options
 Member shall have option to commute 1/3rd of
pension for lump sum payment as commutation of
pension.
 Pension payable for life time of the Member

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Pension Benefits on Resignation
Termination/Dismissals etc.
Pension annuity to be purchased only from members
contribution and interest earned thereon.

12. DPE WORKSHOP on PENSION -19-11-2012-HYDERABAD 12
General provisions-Transfer of
Pension Fund etc
In case of inter CPSE movement- transfer of pension
fund is allowed if similar scheme is available with the
new employer.
Service rendered in any other CPSE prior to joining
NTPC shall also count for determining 15 yrs eligibility.

13. Plan of presentation
 Salient features of the Pension Scheme
 Status of Implementation
 Issues of concern
 Way forward
DPE WORKSHOP on PENSION -19-11-2012-HYDERABAD 13

14. Status of Implementation
 Approval received from Ministry of Power, Govt of India.
 Pension Trust formed and approval received from
Commissioner Income Tax.
 LIC appointed as Annuity Service Provider.
 Agreement signed with Unions for member contribution
@1% of Salary.
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15. Details of Gratuity and PRMS provisions made in
books accounts
F.Y. Provision for
Gratuity
( Rs. in Cr.)
Provision for
PRMS
(Rs. in Cr).
Remarks
2006-07 0.14 8.10 Provisions as per
actuarial valuation.
For 2006-07(figures
are for three month
only). Amount
provided for
Gratuity for the
respective FY has
been paid by NTPC
to the Gratuity
Fund in the
following year i.e
for 2006-07 in
2007-08 and so on.
2007-08 51.26 29.77
2008-09 469.09 38.34
2009-10 31.40 31.10
2010-11 102.32 67.28
2011-12 67.21 57.82
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HYDERABAD 15

16. Details of Gratuity and PRMS payments made in
previous years
FY Payment for
Gratuity
(Rs. in Cr.)
Payment for
PRMS
(Rs. in Cr.)
Remarks
2006-07 8.38 0.52 For 2006-07
payment details
of gratuity is for
full FY. PRMS
payment is in
addition to the
provisions made
in account for
PRMS.
2007-08 7.88 3.60
2008-09 15.19 4.32
2009-10 59.03 6.30
2010-11 64.86 10.15
2011-12 61.15 13.22
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HYDERABAD 16

17. Plan of presentation
 Salient features of the Pension Scheme
 Status of Implementation
 Issues of concern
 Way forward
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18. Issues of concern
 Methodology for computation of rate of Employer contribution
towards Pension.
 Ceiling of 30% of (Basic Pay + DA) for all superannuation benefits
(CPF, Gratuity, Pension and PRMS).
 As per DPE guidelines all superannuation benefits has to be Defined
Contribution Scheme.
 Gratuity is a Defined Benefits scheme as per the Payment of Gratuity
Act.
 Provision for liabilities towards gratuity is kept in the Company Balance
Sheet based on actuarial valuation
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19. Issues of concern
 Gratuity ceiling increased from Rs.3.50 Lakh to Rs.10.00 Lakh w.e.f.
01.01.2007.
 Increase in Company Liability for gratuity which relates to entire
service of an employee i.e service rendered prior to and post 01.01.2007.
 Whether entire liability is to be deducted from 30% ceiling or is to be
divided in proportion to service prior to and post 01.01.2007?
 If apportionment is not allowed then this will result into cross subsidy.
 No money will be left for pension scheme in the initial four years in
NTPC and defeat of very purpose of providing pension benefits.
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20. Issues of concern
 PRMS scheme in existence in NTPC since 1986.
 Ceiling of 30% applicable only for employees on roll as on 01.01.2007?.
 Whether PRMS liabilities of employees already retired prior to
01.01.2007 is to be covered within 30% ceiling?
 30% guidelines applicable from 01.01.2007 and if retired employees
PRMS are under 30% then this would tantamount to cross subsidy by
existing employees for retired employees.
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21. Issues of concern
Reasonableness/adequacy of pension in case of death and
early retirement
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22. Plan of presentation
 Salient features of the Pension Scheme
 Status of Implementation
 Issues of concern
 Way forward
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23. Way forward
Clarification required from DPE on following issues:
 How to compute rate of company contribution for gratuity- 15 days formulas or
actuarial valuation method?
 Apportionment of increased liability for gratuity in proportion to service prior
to and post 01.01.2007?
 Treatment of PRMS liabilities for employees already separated prior to
01.01.2007-outside 30% ?
 How to provide reasonable/adequate pension in cases of death and early
retirement – can it be done from the corpus created from 1.5% of PTB?.
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24. DPE WORKSHOP on PENSION -19-11-2012-HYDERABAD 24

25. DPE Guidelines on Superannuation Benefits
(Annex-IV- Para 12. OM dt. 26/11/20008)
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26. DPE Guidelines on Superannuation Benefits
(Para 2(ii) of OM dt. 02/04/2009)
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27. Annuity options available from the Insurance Co.
 Pension for life
 Pension guaranteed for certain years 5/10/15/20 or life time,
whichever is more
 Pension for life with return of capital (ROC)
 Joint Life Pension with/without ROC and option of 50% or
100% pension to spouse.
 Increasing annuity- annuity increasing every year by a fixed
% - say 3% simple increase p.a.
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