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Population in excess of 1 Billion
35 States and Union Territories
24 Languages
7 Religions
3000 communities
INDIA
Diversity in language, culture and religion
Does this diversity extend to employee benefits?
Yes & No
Analysed items 2004House Rent Allowance 97Gratuity 95Housing Loan 91Medical reimbursement/ allowance 90Insurance 89Leave Travel allowance 87Hospitalisation 86Variable Bonus 85Conveyance allowance 84Superannuation 61Car Loan 54Social/ Sports club membership 51Incentive/ Sales Commission 44Hard Furnishing 39Medical check-up 39Fixed Bonus 33Other allowances 26Flexible benefit plan 16
Companies providing benefit (%)
Analysed items 2004House Rent Allowance 97Gratuity 95Housing Loan 91Medical reimbursement/ allowance 90Insurance 89Leave Travel allowance 87Hospitalisation 86Variable Bonus 85Conveyance allowance 84Superannuation 61Car Loan 54Social/ Sports club membership 51Incentive/ Sales Commission 44Hard Furnishing 39Medical check-up 39Fixed Bonus 33Other allowances 26Flexible benefit plan 16
Companies providing benefit (%)
Analysed items 2004House Rent Allowance 97Gratuity 95Housing Loan 91Medical reimbursement/ allowance 90Insurance 89Leave Travel allowance 87Hospitalisation 86Variable Bonus 85Conveyance allowance 84Superannuation 61Car Loan 54Social/ Sports club membership 51Incentive/ Sales Commission 44Hard Furnishing 39Medical check-up 39Fixed Bonus 33Other allowances 26Flexible benefit plan 16
Companies providing benefit (%)
Overview of Employee Benefit Scenario In India
Employee CompensationEmployee
Compensation
SalarySalary Allowances & Bonus
Allowances & Bonus
Employee Benefits
Employee Benefits
Overview of Employee Benefit Scenario In India
Employee BenefitsEmployee Benefits
Mandatory
Mandatory Voluntar
yVoluntar
y
Provident Fund
Provident Fund GratuityGratuity
Personal AccidentPersonal Accident
Mediclaim
Mediclaim
Leave Encashm
ent
Leave Encashm
ent
Life Insuranc
e
Life Insuranc
e
Super-annuatio
n
Super-annuatio
n
Employee Benefits – Insurance Co’s viewpoint
Employee BenefitsEmployee Benefits
Insurance
Insurance
Retirement
Retirement
Defined Contributi
on
Defined Contributi
onDefined Benefit
Defined Benefit
LifeLifeAccident
Accident
Mediclaim
Mediclaim
Leave Encashme
nt
Leave Encashme
nt
GratuityGratuity
Superannuation
Superannuation
Mediclaim Insurance•Reimbursement of medical expenses following hospitalization
•Cash less hospitalization facility available under certain plans
•Tax deduction available for the business
Accident Insurance• Can offer compensation for any/all of the following:
• Accidental death, disability
• Medical expenses for treatment post accident
• List of exclusions
BOTH BENEFITS ARE OFFERED BY NON-LIFE INSURANCE COMPANIES
Life Insurance• Benefit payable on accidental/natural death (limited exclusions)
• Convenient eligibility conditions
• Additional Optional riders
PROVIDED BY LIFE INSURANCE COMPANIES
Life Insurance – Trends• Monopoly of one single company so far
• Increasing popularity amongst employers/ employees
• General cover is about 3 to 5 times the gross annual salary
• Companies with huge staff strength opt for profit-sharing
Leave Encashment –Defined benefit
For whom?– If company offers encashment of leave, all employees
What benefit?– Will be based on the company policy.– Normally x days salary for each accumulated day of
leave How Funded?
– Institute of Chartered Accountants of India require that a provision be made for the liability.
– No special tax benefits for self-funding through a trust– Insurance plans available to manage the funds
Gratuity – Defined Benefit
For whom?– Engaged in Factories, Mines, Plantations, Railways,
Shops and establishments notified by Government– In service for 5 successive years
What benefit?– 15 days wages for each year of service– Maximum limit Rs 3,50,000/– 7 days wages per season for seasonal occupation
How Funded?– Can be funded our unfunded.– Special tax concessions if funded through a trust or
insurance company
Superannuation – Defined Contribution/ benefit
For whom?– Non-mandatory, defined by company policy
What benefit?– Can be defined benefit(certain formula of last drawn
salary) /defined contribution(certain %age of salary every month contributed to a fund)
– Can be different for different grades How Funded?
– Can be funded our unfunded.– Special tax concessions if funded through a trust or
insurance company
Retirement Benefits - Trends
• Only one life insurance company in the market till 2000
• Offered a cash-accumulation conventional scheme
• More and more companies now funding through Insurance
• Unit-linked – a preferred platform
• Pensions benefits - from Defined Benefit to defined
contribution
MRC Management Services Pvt Ltd
Pune leading Labour Law Consultant
Employee Benefits – Insurance Co’s viewpoint
Employee BenefitsEmployee Benefits
Insurance
Insurance
Retirement
Retirement
Defined Contributi
on
Defined Contributi
onDefined Benefit
Defined Benefit
LifeLifeAccident
Accident
Mediclaim
Mediclaim
Leave Encashme
nt
Leave Encashme
nt
GratuityGratuity
Superannuation
Superannuation
Employee Benefits – Insurance Co’s viewpoint
Employee BenefitsEmployee Benefits
Insurance
Insurance
Retirement
Retirement
Defined Contributi
on
Defined Contributi
onDefined Benefit
Defined Benefit
LifeLifeAccident
Accident
Mediclaim
Mediclaim
Leave Encashme
nt
Leave Encashme
nt
GratuityGratuity
Superannuation
Superannuation
