Welcome

Proposed Pension Scheme of NTPC

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

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

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

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

Salient features of the Pension

Scheme
By a separate
Pension
Trust
recognized
as
approved
superannuation fund under IT Act, Trustees
nominated by both management and employees.

Administration

of

the

Scheme:

: In the form of pension annuity

from annuity service provider-LIC of India.

Pension payment

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

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.

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

Contribution Structure
Mandatory members Contribution: 1% of

(Basic Pay + DA)

Voluntary

Contribution: Option
voluntary contribution by member

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

to

make

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.

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

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).
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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.

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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.

DPE WORKSHOPfor
on PENSION
Pension payable
life -19-11-2012-HYDERABAD
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.

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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.

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Plan of presentation
Salient features of the Pension Scheme
Status of Implementation
Issues of concern
Way forward

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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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F.Y.

Details of Gratuity and PRMS provisions

made in books accounts
Provision for
Gratuity
( Rs. in Cr.)

Provision for
PRMS
(Rs. in Cr).

2006-07

0.14

8.10

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 -19-11-2012HYDERABAD

Remarks

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.

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Details of Gratuity and PRMS payments

made in previous years
FY

Payment for
Gratuity
(Rs. in Cr.)

Payment for
PRMS
(Rs. in Cr.)

2006-07

8.38

0.52

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 -19-11-2012HYDERABAD

Remarks

For
2006-07
payment details
of gratuity is for
full FY. PRMS
payment is in
addition to the
provisions made
in account for
PRMS.

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Plan of presentation
Salient features of the Pension Scheme
Status of Implementation
Issues of concern
Way forward

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Issues of concern
Methodology

for computation
contribution towards Pension.

of

rate

of

Employer

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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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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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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Issues of concern

Reasonableness/adequacy of pension in case of

death and early retirement

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Plan of presentation
Salient features of the Pension Scheme
Status of Implementation
Issues of concern
Way forward

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

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DPE Guidelines on Superannuation

Benefits (Annex-IV- Para 12. OM dt.
26/11/20008)

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DPE Guidelines on Superannuation

Benefits
(Para 2(ii) of OM dt.
02/04/2009)

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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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