It came into force from 1st January,1982, and provides employees either the life insurance cover in the case of death during service or a maturity amount in the case of retirement from service.
A portion of the subscription is credited to Insurance Fund and the other portion to theSavings Fund in the ratio of 3:7. The Savings Fund will earn interest at the prescribed rate to be compounded quarterly.
Monthly subscription, life insurance sum assured and Maturity amount applicable for different cadres are as follows
| Employee Cadre | Contribution per Month (Rs.) | Insurance cover (Rs.) |
|---|
| A | 120 | 1,20,000 |
| B | 60 | 60,000 |
| C | 30 | 30,000 |
| D | 15 | 15,000 |
Features of this Scheme:
- On Resignation/Retirement :- Amount of subscription credited to the Savings Fundalong with interest thereon will be paid to the employee.
- On Death : Amount of insurance cover of the group to which he belongs on the date of death and the accumulation in Savings Fund will be paid to his nominee/heirs.
- If an employee dies before he was enrolled as a member (i.e. between the date of his joining service and the following Ist January), only the insurance amount will be paid to the nominee/heirs.
- Employee can assign the insurance cover and accumulation in the savings fund to a recognized financial institution, for obtaining housing loans. However, no loans/advance or withdrawals are permitted from Insurance Fund/Savings Fund.
- The amount of subscription is eligible for Income Tax Rebate u/s 88 of IT Act.
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