NTPC.ppt

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
NatureoftheScheme:DefinedContributionScheme.
Contributionsaredefinedinadvance
Benefitsdependuponaccumulatedcorpus
Nocrosssubsidy,individualmemberpensionaccount.
EffectiveDate:01/01/2007
Coverage:AllemployeesonregularrollsofNTPCason01/01/2007&
employeesjoiningthereafter.
MandatoryorOptional:Mandatory
DPE WORKSHOP on PENSION -19-11-2012-HYDERABAD 3

4. Salient features of the Pension Scheme
AdministrationoftheScheme:ByaseparatePensionTrust
recognizedasapprovedsuperannuationfundunderITAct,
Trusteesnominatedbybothmanagementandemployees.
Pensionpayment:Intheformofpensionannuityfrom
annuityserviceprovider-LICofIndia.
DPE WORKSHOP on PENSION -19-11-2012-HYDERABAD 4

5. Contribution Structure
CompanyContribution:Within30%of(BasicPay+DA)
asstipulatedforallsuperannuationbenefitsi.eCPF,
Gratuity,PRMS&Pension.
AfterpayingforCPF,GratuityandPRMS,exactrateof
companycontributionforPensionshallbenotified
annually.
ContributionforGratuityandPRMSshallbetakenasper
actuarialvaluation.
DPE WORKSHOP on PENSION -19-11-2012-HYDERABAD 5

6. Contribution Structure
Mandatorymember’sContribution:1%of(BasicPay+
DA)
VoluntaryContribution:Optiontomakevoluntary
contributionbymember
DPE WORKSHOP on PENSION -19-11-2012-HYDERABAD 6

7. Members Account
JustlikeCPF-individualmemberPensionaccountshall
bemaintained.
ContributionmadebyCompanyandMembershallbe
creditedinindividualmemberpensionaccount.
InterestearnedbyTrustoninvestmentofFundshallbe
creditedtoindividualmemberaccountattheendofthe
year.
DPE WORKSHOP on PENSION -19-11-2012-HYDERABAD 7

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
Deathwhileinservice*
TotalPermanentdisablement*
VRS/VSS
(*-minimumserviceof15yrsnotapplicableincaseofdeath
and total permanent disablement).

9. DPE WORKSHOP on PENSION -19-11-2012-HYDERABAD 9
Pension Benefits
MinimumPension:UnderDCschemethereisno
minimumassuredpension.
Quantum ofPension:Willdependsupon
accumulatedcorpusinthememberaccountatthetime
ofseparationandthethenprevailingannuityratesand
annuityoptionsofannuityserviceprovider.

10. DPE WORKSHOP on PENSION -19-11-2012-HYDERABAD 10
Mode of Pension Payment
IntheformofpensionannuityfromLICofIndia.
Membertohaveoptiontochooseanyoftheannuity
optionofLICofIndia.-LICPensionoptions
Membershallhaveoptiontocommute1/3rdof
pensionforlumpsumpaymentascommutationof
pension.
PensionpayableforlifetimeoftheMember

11. DPE WORKSHOP on PENSION -19-11-2012-HYDERABAD 11
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
IncaseofinterCPSEmovement-transferofpension
fundisallowedifsimilarschemeisavailablewiththe
newemployer.
ServicerenderedinanyotherCPSEpriortojoining
NTPCshallalsocountfordetermining15yrseligibility.

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.
DPE WORKSHOP on PENSION -19-11-2012-HYDERABAD 14

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 Provisionsasper
actuarialvaluation.
For2006-07(figures
areforthreemonth
only). Amount
provided for
Gratuityforthe
respectiveFYhas
beenpaidbyNTPC
totheGratuity
Fund inthe
followingyeari.e
for2006-07in
2007-08andsoon.
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
DPE WORKSHOP on PENSION -19-11-2012-
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
paymentdetails
ofgratuityisfor
fullFY.PRMS
paymentisin
additiontothe
provisionsmade
inaccountfor
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
DPE WORKSHOP on PENSION -19-11-2012-
HYDERABAD 16

17. 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 17

18. Issues of concern
MethodologyforcomputationofrateofEmployercontribution
towardsPension.
Ceilingof30%of(BasicPay+DA)forallsuperannuationbenefits
(CPF,Gratuity,PensionandPRMS).
AsperDPEguidelinesallsuperannuationbenefitshastobeDefined
ContributionScheme.
GratuityisaDefinedBenefitsschemeasperthePaymentofGratuity
Act.
ProvisionforliabilitiestowardsgratuityiskeptintheCompanyBalance
Sheetbasedonactuarialvaluation
DPE WORKSHOP on PENSION -19-11-2012-HYDERABAD 18

19. Issues of concern
GratuityceilingincreasedfromRs.3.50LakhtoRs.10.00Lakhw.e.f.
01.01.2007.
IncreaseinCompanyLiabilityforgratuitywhichrelatestoentire
serviceofanemployeei.eservicerenderedpriortoandpost01.01.2007.
Whetherentireliabilityistobedeductedfrom30%ceilingoristobe
dividedinproportiontoservicepriortoandpost01.01.2007?
Ifapportionmentisnotallowedthenthiswillresultintocrosssubsidy.
Nomoneywillbeleftforpensionschemeintheinitialfouryearsin
NTPCanddefeatofverypurposeofprovidingpensionbenefits.
DPE WORKSHOP on PENSION -19-11-2012-HYDERABAD 19

20. Issues of concern
PRMSschemeinexistenceinNTPCsince1986.
Ceilingof30%applicableonlyforemployeesonrollason01.01.2007?.
WhetherPRMSliabilitiesofemployeesalreadyretiredpriorto
01.01.2007istobecoveredwithin30%ceiling?
30%guidelinesapplicablefrom01.01.2007andifretiredemployees
PRMSareunder30%thenthiswouldtantamounttocrosssubsidyby
existingemployeesforretiredemployees.
DPE WORKSHOP on PENSION -19-11-2012-HYDERABAD 20

21. Issues of concern
Reasonableness/adequacyofpensionincaseofdeathand
earlyretirement
DPE WORKSHOP on PENSION -19-11-2012-HYDERABAD 21

22. 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 22

23. Way forward
Clarification required from DPE on following issues:
Howtocomputerateofcompanycontributionforgratuity-15daysformulasor
actuarialvaluationmethod?
Apportionmentofincreasedliabilityforgratuityinproportiontoserviceprior
toandpost01.01.2007?
TreatmentofPRMSliabilitiesforemployeesalreadyseparatedpriorto
01.01.2007-outside30%?
Howtoprovidereasonable/adequatepensionincasesofdeathandearly
retirement–canitbedonefromthecorpuscreatedfrom1.5%ofPTB?.
DPE WORKSHOP on PENSION -19-11-2012-HYDERABAD 23

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)
DPE WORKSHOP on PENSION -19-11-2012-HYDERABAD 25

26. DPE Guidelines on Superannuation Benefits
(Para 2(ii) of OM dt. 02/04/2009)
DPE WORKSHOP on PENSION -19-11-2012-HYDERABAD 26

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.
DPE WORKSHOP on PENSION -19-11-2012-HYDERABAD 27