Employee Benefit Solutionpresentation

8/7/2019 Employee Benefit Solutionpresentation

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Employee Benefit SolutionsDate : 27th January, 2010

Presented by: Shailesh Mehta

Tiger Trail Corporate Solutions

843/1 MG Road, New Delhi - 30

011-65095476, 9811825077


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Content

Employee Benefits Solutions in the Market

Group Term Insurance

Group Gratuity


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Employee Benefit Scenario In

India


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Group Life Insurance

Group Life insurance can be a great incentive in recruiting and

retaining talent

Increases motivation and employee loyalty

Provides financial freedom to your employees

Group Life Insurance is single policy which covers the lives of the employees /

members of an organization


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Benefits for Employer

Provides financial security to the employees at a minimal cost

Serves as a strong retention tool and as a loyalty building measure

Hassle free administration and enrollment Free Cover Limit

Premium payable is an approved business expense under the

current Income Tax laws.#

Allows for uniform business expense to cover fluctuating mortality

risk


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Benefits for Employee

Provides financial security to the family and dependents of the

employee

Hassle free enrollment

The Face Amount is not taxable in the hands of the beneficiary

Cheaper than individual coverage

Option available to convert from Group to Individual policy whileleaving the company


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Some GTL Concepts

Actively at Work clause

Free cover limit

Medical Underwriting


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Service Delivery

Claim

Turn-around Time

Documentation advice

Addition & Deletion of Members

Customer Service


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Details Required to Generate

Quote

Employee Name

Number

Gender

Date of birth

Designation

Salary

Past death experience for 3 years


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Employee Benefit

Mandatory

P F / EDLI Gratuity

Voluntary

Group TermLife

SuperAnnuation

LeaveEncashment


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What is Gratuity ?

Gratuity is

A gratuitous payment

A parting gift

Supreme Court on Gratuity:

Gratuity is one of the efficiency devices meant for orderly and humane

elimination of superannuated and disabled employees whose retention in

service would be detrimental to efficiency.


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What is Gratuity

Gratuity to be paid on retirement, termination, superannuation, death

and disability of an employee

Liability accrues every year of service put in by the employee

Gratuity liability will be proportional to changes in salary

Formula for calculation = 15/26*last drawn salary*no. of years

served


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Why pay Gratuity

Statutory obligation for employers

Retirement benefit for the employees

Tax free in the hands of employee till Rs.350000

Good HR initiative (Gratuity can be bettered by the employer)

Employee motivation to stay in the Company for a considerable time


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When should an employer pay

gratuity

Obligatory for an employer having 10 or more

employees

Gratuity payable to an employee :

On termination, superannuation, retirement, death and disability

After the employee has rendered continuous service for not less than 5 years *

* (Service of 5 years not necessary in case of death and disability)


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Options to meet your Gratuity Liability

Create anInternal Reserve

Fund

Gratuity Liability

Insurance Managed

Gratuity Plan

CompanyCompany

Pay as you go

Self managed


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Need to fund for Gratuity

Bulk recruitments lead to bulk retirements

There may by large payments in certain years

Death / Accidents / Industry slump

Avoid overstated profits in books

In accord with the latest accounting standards


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Gratuity Solutions


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Gratuity Features

Scheme will be administered through the creation of a Trust

Guaranteed Investment options

Investment in two Investment Fund options - Debt and Balanced

Switching between investment fund options allowed

Scientific actuarial estimation of past service gratuity liability

Future service gratuity can be covered through a group term insurance plan


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Service

Mutually agreed Service Level Agreements

Agreed Turn Around Times for various deliverables

Focused service:

Separate Relationship Manager for handling the accounts

Service Delivery Team for Post Sale servicing

Assistance in formation of Trust

Facilitation for transfer of funds from your existing Insurer etc

Panel for AS-15 certification


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Investment Pattern

Two Fund Options

Debt

To earn regular income by investing in high quality Fixed Income

securities

Balanced

To generate Capital appreciation and current income, through a

judicious mix of investments in equities and Fixed securities.

Conservative Long Term approach

No outsourcing of investments

Investment Committee Seven Member team


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Process

Member information to be given with benefit structure

Actuarial estimation of funding rate will be provided by MetLife

Board Resolution for the formation of a trust and complete other

documentation

Application Form to be Completed

Collection of premium


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Details Required to Generate

Quote

Employee Name

Number

Gender

Date of birth

Designation

Salary

Past death experience for 3 years

Definition of gratuity with regards to the specific trust


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PAY AS YOU GO METHOD

Characteristics:

Pay gratuity liability as and when it arises

There is no creation of any reserve or provision in the books of

accounts

Disadvantages:

Not a systematic way of paying off gratuity liability

Overstatement of profits leading to Higher taxes and Dividends

Unexpected deaths/disabilities will impact the P&L to a large extent

Not compliant with AS 15

BACKBACK


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Internal Reserve

Characteristics:

Provision is made in books of accounts

There is a reflection of accrued liability

Profits are not overstated

Disadvantages:

The provision is notional and not actual

Money can get invested in the business

No tax benefit

Creditors have claim to the reserve

Unexpected deaths/disabilities will impact the P&L to a large extent

BACKBACK


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Self Managed Gratuity Fund

Characteristics:

Set up an irrevocable trust

Trustees will invest the funds and make gratuity payments

Tax benefits for the Company ( Claim as business

expenditure)

Trustees will have control over the investments

Investments can be made in accord with Companys risk

appetite.


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Self Managed Gratuity Fund

Disadvantages:

Investment options are limited

Trustees do have a business role to play

Trustees are responsible for administration and investment of funds in addition to their

busy business roles

Liquid funds to be maintained to pay immediate gratuity requirement

Actuarial valuation complexities

Securities will be bought in small amounts which leads to increased

costs

BACKBACK


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Characteristic of a Well Managed

Gratuity Fund

Wider Investment Options

Optimum returns for the investments

Better returns will lead to lesser costs of funding for gratuity liability

Tax benefits for the Company ( Claim as business expenditure)

Pooling of various gratuity funds will reduce the costs

Saves time for Company Officials

Control of funds remain with the trust

Liquidity management is very efficient


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Thank You

Employee Benefit Solutionpresentation

Documents

Transcript of Employee Benefit Solutionpresentation