1 PROPOSED “PENSION SCHEME” Insurance Companies Vs. NPS 19 th November, 2012.

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Presentation transcript:

1 PROPOSED “PENSION SCHEME” Insurance Companies Vs. NPS 19 th November, 2012

2 The Pension scheme finalized by BEL is better when compared to NPS Scheme as explained below: The NPS scheme is NAV (Net Asset Value) based which is subject to market risks & fluctuations. Whereas the plans finalized by BEL with LIC & SBI Life are non-unit linked traditional investment plans with a Capital Guarantee. BEL’s scheme is not based on NAV and hence risk free. The annual contributions including interest accumulations at the end of each year are guaranteed by LIC & SBI Life.

3 Cost of Administration: As per NPS Scheme, there are annual fixed charges for management of funds as well as annual custodian charges apart from certain transaction charges. However, as per the BEL’s scheme, LIC and SBI Life do not charge any fees for fund management and there are no entry / exit / custodian / transaction charges. The savings in the charges will help in enhancing the fund accumulations and returns to the Employees of BEL.

4 High Yield on fund accumulations: LIC & SBI Life have a robust investment process with a primary goal of generating potentially higher returns and at the same time maintaining consistency in performance. The traditional Plans for retirement benefits are on a Non-Unit linked platform which helps in capitalizing the returns declared at the end of each financial year. Moreover, LIC & SBI offer unique pooling of Fund Advantage wherein aggregated amount of all the funds of BEL under various other schemes like Gratuity, are taken into consideration while declaring the rate of return on investments which is based on Fund Size. BEL Gratuity Trust is already having total investments of about Rs.210 Crores already with LIC and SBI Life as on date. The pension contributions will increase the fund size of LIC & SBI Life and accordingly, returns will be higher.

5 Better Control: Complete direct control on the trust fund will remain with the BEL Pension Trust. The records are maintained by LIC & SBI Life in house. Whereas in NPS Scheme, the funds are managed by insurance companies indirectly and BEL does not have direct control. Records are maintained by CRA (Central Recordkeeping Agency) i.e. National Securities Depository Limited (NSDL).

6 Easy Operation: LIC & SBI Life have offices in Bangalore and it is very easy and smooth for day-to-day operations like payment of contributions, settlement of claims, servicing of Employees etc. An outsourced scheme provides instant liquidity to the policy holders.