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Presented ByUTI Infrastructure Technology And Services Limited
(a Government of India Company)ISO 9001: 2000 / 27001:2005 / 20000:2005 Certified
Plot No. 3, Sector 11, CBD Belapur Navi Mumbai – 400614
UTI Infrastructure Technology UTI Infrastructure Technology And Services LimitedAnd Services Limited
Year 2012 Year 2042
Pension is a form of Social Security/ Insurance in the form of Monthly payments paid to the citizens on attaining the age of superannuation / retirement to take care of day to day living expenses.
WHAT IS PENSION ?
WHY PENSION ?
Fall of Joint Family System Increase in Life Expectancy Improvement in Standard of Living,
Hygiene and Medical Facilities Increase in Diseases Increase in Cost of Living Expenses Changing Life Styles Sustainable Income for 2 to 2 ½
decades
Expectancy of Life After Retirement
Life expectancy has increased from 60 years to 80 years at present
Live joyfully today as if your going to die today evening
Plan for your future as if you are going to live for at least 100 years from now.
Advantages of Early Financial / Retirement Planning Larger time horizon. Develop Savings habit You budget your current expenditures Try to enhance your income Levels Time & energy for Extra Working Exploring new opportunities for investments You have the risk taking capacity IDEAL AGE FOR START OF RETIREMENT
PLANNING IS 25-28 YEARS
The early you Start Investing, the Better it is! X starts Investing at the age of 28 yrs He Invests `1000 every month till the
age of 58 yrs Total Investment: `3.60 Lacs
Y starts Investing at the age of 38 yrs He Invests `1500 every month till the
age of 58 yrs Total Investment: `3.60 Lacs
20.7910.86
Early Investment, Always Pays
@10% assumed rate of growth
X Y
Assuming a growth of 10% CAGR in both the cases, X’s investment would appreciate to `20.79 Lacs and Y’s Investment would appreciate to `10.86. That means X’s investment would appreciate to almost double that of Y’s
Life Stages
Projection of Earnings & Expenses
AGE
EA
RN
ING
&
EX
PE
NS
ES
Just Employed
Marriage and house
hold expenses
Children and
educationPlanning for Retirement
1-20 20-25 25-34 34-55 55-60 60 & Above
Education
Retired Life
INCOME REQUIREMENTS ON RETIREMENT
Current Per Person Per Meal requires : ` 50.00
3 Meals a Day requires : ` 50.00 x 3 =
`150.00
For 2 Persons requirement is : `300.00 Per day
Current Income Requirement for Per annum (for Food) `109,500.00
Additional Household Requirements / Annum (Rentals,
Electricity, Telephone / Mobile, Gas / Fuel, conveyance)
etc.
: `60000.00
Medical Expenses for a Retired Couple / Annum : `25000.00
Miscellaneous Expenses / Annum : `5000.00
Total : `2,00,000.00
Requirements for 2 Member family : `2.00 Lakhs P.A.
Requirement Per Annum at the end of 20 Years
(10% inflation)
: `13.45 Lakhs P.A.
Requirement for 25 Years : `3.36 Crores
NEW PENSION SYSTEM A VIDEO FILM
Voluntary It is prudentially regulated by Government, Simple and Easy to understand Low Cost Allotment of Unique PRAN Number Ensures Complete Portability Flexibility Transparency Simple and Web enabled/Online
WHY NATIONAL PENSION SYSTEM(NPS)?
NPS – An Open ended Investment Scheme with following features:
Two types of accounts are available under the scheme:
Tier I Account - A Non-Withdrawable account (Creating a retirement Corpus)
Tier II Account - A voluntary savings Account - Providing liquidity to park your short term spare funds.
Investment Choice
Active Choice – Individual choice (Asset Class E, C & G).
Auto Choice – Lifecycle Fund.
Equity (not more than 50% of total
Investment) Corporate Bonds (No Limit) Government Bonds (No Limit)
ACTIVE CHOICE
TABLE FOR AUTOCHOICE (LIFECYCLE FUND)
Age Asset Class E Asset Class C Asset Class G
Up to 35 yrs 50% 30% 20%
36 yrs 48% 29% 23%
37 yrs 46% 28% 26%
38 yrs 44% 27% 29%
39 yrs 42% 26% 32%
40 yrs 40% 25% 35%
41 yrs 38% 24% 38%
42 yrs 36% 23% 41%
43 yrs 34% 22% 44%
And so on……
Key Benefit of NPS For Middle And Lower Middle Class
(Can be done by people in the Unorganized Sector)
NPS offers you a grant of `1,000/- per annum for investors investing less than `12000/- per annum (for the subscribers who do not come under the fold of any of the Provident Fund Schemes of India), subject to Net minimum contribution of `6000/- in the current Financial Year.
Provide Services for Application Collection from Subscribers, KYC Documentation and Registration Formalities
Contribution Collection and Uploading Withdrawals Other Subscriber Services Issue of PAN Card (Charges applicable) Grievance Resolution
ROLE OF POINT OF PRESENCE(POP – UTIITSL)
Change of ParticularsChange of NomineeChange of Composition of Asset ClassChange of Auto-Active Choice OptionChange of Pension Fund ManagersWithdrawalsStatement of Transactions
OTHER SERVICES
• Recordkeeping and Administration• Issue of PRAN Number• Maintenance of Databases• Coordination between various
Intermediaries
Role of Central Record keeping Agency (CRA)
Government Sector: (All Three) (This model can be opted only by Corporates and not by Individual Subscribers)
LIC Pension Fund LimitedSBI Pension Funds LimitedUTI Retirement Solutions Limited
Any one Pension Funds Managers under the Unorganized Sector are :
ICICI Prudential Pension Funds Management Company LimitedIDFC Pension Fund Management Company LimitedKotak Mahindra Pension Fund LimitedReliance Capital Pension Fund LimitedSBI Pension Funds LimitedUTI Retirement Solutions Limited
PENSION FUNDS MANAGERS
ANNUITY SERVICE PROVIDERS
On attaining Normal Retirement Age (NRA) of 60 years – compulsory annuitizing of at least 40% of your pension wealth and the remaining 60% can be withdrawn as a lump sum or in a phased manner.
Minimum 10% of the pension wealth should be withdrawn every year. Any amount lying to the credit at the age 70 should be compulsorily withdrawn in
lumpsum.
Life Insurance Corporation of India SBI Life Insurance Co. Ltd. ICICI Prudential Life Insurance Co. Ltd. Bajaj Allianz Life Insurance Co. Ltd. Star Union Dai-Ichi Life Insurance Co. Ltd. Reliance Life Insurance Co. Ltd. HDFC Standard Life Insurance Co. Ltd.
ANNUITY SERVICE PROVIDERS
Annuity Service Providers (ASPs) appointed by PFRDA shall provide Pension in the form of Annuities to the individual subscribers from the age of 60 years till death.
On death, the balance corpus will go to the Nominee.
Pension benefits shall be given by the Annuity Service Providers
(a) Pension (Annuity) payable for life at a uniform rate to the annuitant only.
(b) Pension (Annuity) payable for 5,10,15 or 20 years certain and thereafter as long as you are alive. In this type of Annuity, every higher option of number of years of Pension chosen, will give you lesser amount of proportionate Pension.
(c) Pension (Annuity) for life with return of purchase price on death of the annuitant (Policyholder).
(d) Pension (Annuity) payable for life increasing at a simple rate of 3% p.a.
(e) Pension (Annuity) for life with a provision of 50% of the annuity payable to spouse during his/her lifetime on death of the annuitant. (Ardhangi)
(f) Pension (Annuity) for life with a provision of 100% of the annuity payable to spouse during his/her life time on death of the annuitant. ((In this option (f) The amount of pension available to the Subscriber during lifetime will be less than that available under option e)).
06 Types of Annunities under NPS
NPS Trust (overall Controlling Body) NPS Trustee Bank (Intermediary for
Fund collection from POPs and depositing in the PFMs and withdrawals)
Custodian
OTHER INTERMEDIARIES
BENEFITS TO SUBSCRIBER
Cheapest investment product with better growth options through long term market-linked saving
Choice of various funds
Individual Retirement Account is portable
Platform to monitor and manage investment to meet subscriber's diverse financial goals
Employees contribution is eligible for tax exemption as per the Income Tax Act, 1961 as amended from time to time (Only in Tier I Account)
Offers Tier II account which is a voluntary savings facility with anytime liquidity/withdrawal option
Grievance management through CRA Website, Call Center, Email or Postal Mail
Routine/quarterly disclosure of the funds
Auto Choice option
Release of daily NAV by PFMs
An option to remain invested even after your retirement.
SERVICES TO SUBSCRIBERS
A citizen of India, whether resident or non-resident can join NPS subject to the following conditions :
Subscriber should be between 18-60 years of age as on the date of submission of his / her application.
Subscriber should comply with the prescribed Know Your Customer (KYC) norms as detailed in the Subscriber Registration Form (CS-1 and CS-2).
ELIGIBILITY NORMS
OPERATIONAL FEATURES OF NPSParticulars Tier I Tier II
Option of Selection of Account Mandatory Optional
Initial contribution at the time of account opening
Rs.500 Rs.1000
Minimum amount per contribution Rs.500 Rs.250Minimum account balance at the end of Financial Year
As applicable
Rs.2000
Minimum amount of contribution per annum
Rs.6000 1000
Minimum Number of Contributions/Annum
One One
Frequency on Number of Installments and Cap on the Amount to be Invested
Unlimited Installments and No cap on amount
Scheme Operational Charges A low cost option for planning retirement and giving maximum
returns to subscribers.
Intermediary
Charge Head Service Charges
Method of Deduction
CRA
PRAN Opening Charges Rs. 50
Through cancellation of
units
Annual PRAN Maintenance Cost per account
Rs.225
Charge per transaction Rs. 6
POP
Initial subscriber registration and contribution upload
Rs.100
To be collected upfront
Any subsequent transaction2
0.25% of the Contribution Amount subject to a Minimum of Rs.20/- per contribution
Intermediary Charge Head Service Charges
Method of Deduction
Trustee Bank
Per transaction emanating from a RBI location
Zero
Through NAV deductionPer transaction
emanating from a Non-RBI location4
Rs.15
Custodian Asset servicing charges
0.0075% p.a. for electronic segment & 0.05% p.a. for physical segment
Through NAV deduction
PFM charges Investment Management fee3
0.25% p.a. wef 01/11/2012
Through NAV deduction
Contd…
Why NPS Through UTI ITSL
UTI ITSL is a Government of India Co. UTI ITSL has 69 Branches across the
Country UTI ITSL has more than 300 AMFI
qualified Staff giving Personalized Service across the country
All information about the NAV, MF Schemes can be easily available.
PAN Card Service can be made available(Charges applicable)
High quality of Service Orientation
NPS can be run simultaneously with Superannuation, PF, Gratuity etc.
Corporate acts only as a Support System for extending the Retirement benefit to its employees, without any short/long term liability
NPS – How is it Beneficial for Corporate
CORPORATE CAN CHOOSE Extend this Benefit to a Select Group
of Employees within the Company Fix the Contribution amount as a
Percentage of Basic Pay Fix the Frequency of Contributions Choose the Government Model or the
All Citizen’s Model
NPS – How is it Beneficial for Corporate
Platform to co-contribute for employees’ pension
Corporate may select choice of PFM for its employees or leave the option to employees for selecting PFMs for themselves.
Can claim tax benefits for the amount contributed towards pension of employees from 1st Apr, 2012 upto 10% of the salary (basic and dearness Allowance)Tax Deductible allowance of employers Contribution
BENEFITS TO CORPORATES
EXAMPLE 1 EXAMPLE 2 EXAMPLE 3
Without NPS Contribution
With NPS Contribution
Without NPS Contribution
With NPS Contribution
Without NPS Contribution
With NPS Contribution
Annual Salary Annual Salary Annual Salary
10% Tax Bracket 20% Tax Bracket 30% Tax Bracket
Basic Pay 350000 350000 600000 600000 1000000 1000000
HRA(50%) 175000 175000 300000 300000 500000 500000
Professional Allowance 80000 45000 140000 80000 250000 150000
Contribution to PF (12%) 42000 42000 72000 72000 120000 120000
Contribution to Gratuity(4.81%) 16835 16835 28860 28860 48100 48100
Contribution to NPS 0 35000 0 60000 0 100000
Gross Salary 663835 663835 1140860 1140860 1918100 1918100
Deductions
Section 80 C (includes Employee Contribution to 100000 100000 100000 100000 100000 100000
Mediclaim 15000 15000 15000 15000 15000 15000
Section 80CCD(2) 0 35000 0 60000 0 100000
Total 115000 115000 115000 115000 115000 115000
Total Income 605000 570000 1040000 980000 1750000 1650000
Taxable Income 490000 455000 925000 865000 1635000 1535000
Tax Liability 29000 25500 115000 103000 320500 290500
Tax Savings 3500 12000 30000
Pension Fund
Presented ByUTI Infrastructure Technology And Services Ltd.
(a Government of India Company)ISO 9001 : 2000 / 27001:2005 / 20000:2005 Certified
Plot No. 3, Sector 11, CBD Belapur New Mumbai - 400614