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Thursday, September 30, 2010

NPS can fetch 80% higher yield

If one invests Rs 6000 in NPS then the net yield after 30 years would be minimum 75% higher, as compared to mutual fund and insurance considering the fund performance is same and just because of much higher Fund management charges and allocation charges being charged by them. The 75% higher return is just because govt is also contributing Rs.1000/- per annum, just because, fund management charges being levied
Hence if you want to invest Rs.24000/- better open 4 accounts from your family and invest Rs.6000/- each where you get Rs.4000/- from the government.. Please refer the table
below where comparison is shown in the net yield @ various interest rate with or without govt contribution and be surprised by what difference Rs.1000/- government contribution will make to your portfolio.

Investment of Rs.6000/- is done per annum, if investment amount per annum is higher then increase in Net yield% would fall


Fund management charges for mutual funds 2%

FMC and all other charges in NPS would never exceed 0.055%
ULIPS have lower FMC than mutual fund but loaded heavily with allocation charges in initial policy years
Fund performance of NPS, ULIP and Mutual funds are the same
Investment duration is 30 years

Disclaimer: These are just the indicative figures, please do your own research before investing.

Mutual fund/ULIP’s
Investment amount (per annum)
Investment amount (per annum)
Returns @10%
Returns @10%(deducting 2% per annum FMC)
Returns @10% with govt contribution
Returns @10% with govt contribution
Increase in net yield(due to Rs 1000/- govt contribution)
Shortfall compared to NPS(with govt contribution)
Increase in net yield%
Loss in net yield% compared to NPS(with govt contribution)
Investment amount (per annum)
Investment amount (per annum)
Returns @12%
Returns @12%(deducting 2% per annum FMC)
Returns @12% with govt contribution
Returns @12% with govt contribution
Increase in net yield(due to Rs 1000/- govt contribution)
Shortfall compared to NPS(with govt contribution)
Increase in net yield%
Loss in net yield% compared to NPS(with govt contribution)
Investment amount (per annum)
Investment amount (per annum)
Returns @14%
Returns @14%(deducting 2% per annum FMC)
Returns @14% with govt contribution
Returns @14% with govt contribution
Increase in net yield(due to Rs 1000/- govt contribution)
Shortfall compared to NPS(with govt contribution)
Increase in net yield%
Loss in net yield% compared to NPS(with govt contribution)

NPS (New Pension Scheme)FAQ's For General Public

Who shall be responsible for protecting my interests as a NPS subscriber?

A) The Pension Fund Regulatory and Development Authority, the regulator, will protect your interest.

What is the process for enrolling in NPS?

A) Eligibility: 18-55 years of age. Upon registration, you will receive a permanent retirement account number. Minimum annual contribution is Rs.6,000. The minimum number of instalments per year is four. There is no upper limit on the contribution per instalment or on the number of instalments.

Would my personal information be confidential?

A) Yes.

Under what circumstances can my account be closed before attaining retirement age?
A) The account would be closed under following circumstances: death, account value reduces to zero and change in citizenship status.

Can I exit before attaining the age of 60 years?
A) Yes, provided you annuitise at least 80 percent of your pension corpus.

What if I do not exit the system at or before 70 years?

A) In that case, on attaining 70 years, your account would be closed with the benefits transferred to you.

Can someone else make contributions on my behalf?

A) Yes.

What would be the penalty in case I am unable to contribute the minimum annual contribution?
A) You would have to bear a default penalty of Rs.100 per year of default and the account would become dormant. In order to re-activate the account, pay the minimum contributions, along with penalty due. A dormant account will be closed when the account value falls to zero.

Are there any investment returns guarantees?

A) No. NPS is a defined contribution scheme and the benefits would depend upon the amounts contributed and the investment growth up to the point of exit from NPS.

Will I be permitted to select more than one pension fund to manage my savings?
A) You have to select only one fund. However, the regulator may allow the subscribers to choose more than one fund in future.

What if I do not select any investment option?
A) All your contributions would be channeled into a life-cycle fund.

What are the risks of investing in NPS?

A) As with every investment, there is a degree of risk under NPS also. The value of your investment in NPS may rise or fall.

I am 30 years old and would like to retire at 60. I want a pension of Rs.2,000 per month at today's prices when I retire. How much do I need to contribute?
A) You would need a pension wealth of Rs.319,000 (at today's prices) at the age of 60 to get a pension of Rs.2,000 per month. To realise this, you would need to contribute approximately Rs.16,600 every year.

What will happen to my savings after I retire at 60?

A) You will have to compulsorily invest a minimum of 40 percent of your pension wealth to purchase a life annuity from an IRDA-regulated life insurer. The remaining pension can be withdrawn in lump sum or in a phased manner.

What will happen to my savings if I decide to exit NPS before the age of 60?

A) You would be required to invest at least 80 percent of your pension wealth to purchase a life annuity from any IRDA-regulated life insurer. The remaining 20 percent may be withdrawn as a lump sum.

Will the annuity also provide for a family (survivor) pension?

A) Yes, you will have an option of selecting an annuity which will pay a survivor pension to your spouse.

On my death, can my nominee continue to operate the account in my name?

A) No, the balance standing to the subscriber's account may be transferred to the nominee's account after following regulator KYC procedure.

Can I opt not to exit in case of disability?

A) Yes.

Wednesday, September 29, 2010

The Pension Fund and Regulatory Development Authority (PFRDA) may introduce some changes in NPS to boost the scheme.

A five member committee is constructed to review the implementation scheme and this committee is expected to give its report before the end of this month.

Policy makers has also have some changes in mind. The fund management charges for NPS are much lower than the industry average of 1.25 – 4 per cent. At present, the annual fund management charge of NPS is extremely low, at 0.0009 per cent.

To boost investments in the scheme, Union finance minister Pranab Mukherjee today launched Swavalamban, a form of NPS. Under the scheme, the government will contribute Rs 1,000 per year to each NPS account opened in 2010-11. This will be available for persons who join NPS, with a minimum contribution of Rs 1,000 and a maximum contribution of Rs 12,000 per annum during this financial year

Tuesday, September 28, 2010

Expected Productivity Liked Bonus for Railways Employees

AIRF Secretary Mr.Shiva Gopal Mishra has published a letter in his website regarding the issue of PLB for Railway Employees. In this letter he mentioned that Railway employees may get PLB for 77 days this year, which is increased by 2 days than last year. He hopes that the issue will be sorted out soon and orders to this effect will be issued early.

The amount of bonus for 77 days will be Rs.8860.00.

Monday, September 27, 2010

Dearness Relief Order 2010:
Grant of Dearness Relief to Central Government Pensioners / family pensioners - revised rate effective from 01-07-2010.
Department of Personnel Ministry OM No. 42/18/2010-P&PW(G) dated 31.03.2010 on the subject mentioned above and to state that President of GOI is pleased to decide that the Dearness Relief Payable to central Government Pensoners shall be enhanced form the existing rate of 35% to 45% w.e.f 1st July, 2010,

These order apply to the following categories:
(i) All Civilian Cental Government Pensioners/ Family Pensioners.
(ii) The Armed Forces pensioners, Civilian Pensioners paid out of the Defence Service estimates.
(iii) All India Service Pensioners.
(iv) Railway Pensioners.
(v) The Burma Civilian Pensioners / Family Pensioners.
(vi) Pensioners / family Pensioners of displaces Government pensioners from Pakistan who are in receipt of ad-hoc ex gratia allowance of Rs. 3500 /- per moth.

Central Government Employees who had drawn lumpsum amount on absorption in a PSU/Autonomous body and have become eligible to restoration of 1/3rd commuted portion of pension as well as revision of the restored amount in terms of this Department's OM No. 4/59/97-P&PW(D) dated 14.07.1998 will also be entitled to the payment of DR @ 45% w.e.f 01-07-2010 on full pension.

Saturday, September 25, 2010

Know about Postal Life Insurance

  • Eligibility : Employers of central and state Government, Defence Services, Extra Department & work charged employees of Department of Post & Department of Telecom, Govt. Aided educational institutions, Universities, Nationalised Banks, Public sector Undertakings of central /state Government, Local Bodies like Municipalities, Zilla Parishads etc. Financial Institutions like IDBI, IFCI, IRCI, UTI, etc. Regional Rural Banks, Departmental canteens.
    The Policy can be continued by paying premium in cash in post office after quitting the service

  • Type of Policies :
    1) 'Suraksha' (Whole Life Assurance)
    2) 'Santosh' (Endowment Assurance)
    3) 'Suvidha' (Covertible Whole Life Insurance)
    4) 'Sumangal' ( Anticipated Endowment Assurance)
    5) 'Yugal Suraksha' ( Joint Endowment)
    6) 'Children's Policy'

  • Age : Should be between 19 years and 55 years. For 'Sumangal' 15 / 20 year plan, maximum age is 45/40 years respectively & for Yugal Suraksha age at entry of both the spouses should be between 21 to 45 years and age at maturity of older spouse should not be more than 60 years on the next birth day .

  • Low Premium: Premium rates of P.L.I are lower as compared to those of insurance schemes of any other agencies

  • High Bonus : Bonus rates are higher as compared to those of insurance schemes of any other agencies.
    BONUS RATES (2005-06)
    (per thousand sum assured per year)
    Suraksha (Whole Life Assurance) Rs. 90/-
    Santosh (Endowment Assurance) Rs. 70/-
    Sumangal (Anticipated Endowment Assurance) Rs. 65/-
    Chilren's Policy (Endowment Assurance) Rs. 70/-

  • Income Tax Rebate : PLI premium paid is eligible for income tax rebate under section 80-C of Income Tax Act

  • Risk Cover : Risk is covered on the policy from the date of acceptance of the proposal

  • Advance Deposit 1st Premium : The Development/Field officers of PLI are authorised to collect from proponents advance deposit of amount equivalent to 1st premiums on their proposals and issue receipt thereof.

  • Paid up policies also earn bonus

  • Recovery of premium from pay: Facility of recovery premium from salary is available under the group leader scheme .

  • Maximum Limit of Assurance : PLI offers policies up to a maximum sum assured of Rs. 10 lakhs. Physically handicapped persons are also eligible to take PLI policies up to a face value of Rs. 1,00,000/- under special scheme, subject to certain conditions.

  • Conversion : Whole life policy can be converted into Endowment Assurance Policy.

  • Revival : Revival of policies lapsed due to non payment of premium is allowed on production of good health certificate and payment of arrears premium with interest at 12 % per annum subject to certain conditions under Rule 39/40 of POIF Rules.

  • Loans : Loans can be obtained against the security of PLI policy which have been in force for atleast 3 years/ 4years in case of Santosh/Suraksha respectively.

  • Surrender : a) Suraksha , Santosh & Suvidha policies which have been in force for atleast 3 years can be surrendered for immediate cash payment. Surrender of policy is not admissible before completition of 36 months of the policy and the amount deposited shall be forfeited.

    b) On surrender, the policy shall attract proportionate bonus on reduced sum assured upto the date for which premium has been paid. However, no bonus shall be payable before completion of 5 years of the policy.

    c) The discontinued policy shall not attact bonus with effect from date from which the premium is discontinued.

    d) The reduction sum assured shall be calculated by multiplying the sum assured with number of installments paid and dividing the same with total number of premiums to be paid.

    e) The surrender value shall be calculated by multiplying the sum of reduced sum assured plus the proportionate bonus if any with surrender factor as applicable on the attained age as on the date of surrender of the policy.

  • After Sales Service : The Policy details of all the insurants have been computerised and this enables us in giving an excellent after sales service to the insurants.

  • Nomination/Assignment : Facility of nomination and assignment is available.

  • Non-medical Policies : Scheme of non-medical policies is available up to Rs. 1 lakh sum assured only (age limit 35 years) under certain conditions.

Reduction : A policy holder may apply for reduction of his monthly premium and sum assured without altering the class of his policy.

  • Lapsation of Policy : Policy has been in force for not less then 3 years and premium has not been paid twelve consecutive month and if the policy has been in force for less than 3 years and premium has not been paid for six consecutive months the policy becomes void/lapsed which should be got revived from the Chief DMG (PLI)
    @ 2 % is allowed if annual premium is paid in advance and @ 1 % is allowed if six monthly premium is paid in advance.

The 'SUMANGAL' policy offers the following attractive benefits

15 years Term

20 years Term

1. At the end of 6 years, 20 % of the sum assured is payable

At the end of 8 years, 20 % of sum assured is payable

2. At the end of 9 years, 20 % of the sum assured is payable

At the end of 12 years, 20 % of sum assured is payable

3. At the end of 12 years, 20 % of the sum assured is payable

At the end of 16 years, 20 % of the sum assured is payable

4. At the end of 15 years , 40 % pf the sum assured is payable together with bonus accrued

At the end of 20 years, 40 % of sum assured is payable together with bonus accured

Yugal Suraksha

  • Object : Newly introduced Joint Life Endowment Assurance Plan provides insurance coverage to both the spouses. However only one can subscribe the policy. Spouse need not be an employee.

  • Term : Not Les than 5 years & not more than 20 years.

  • Risk cover : Risk on both the lives is covered from the date of acceptance of the proposal.

  • Premium : The premium based on equivalent age at next birthday is calculated by addition to the lower age depending upon difference in age of spouses. Table "A" for addition in lower age and Table "b" shows premium for equivalent age (Next Birthday).

    A rebate of 2 %, 10 % or 50% of the premium for ONE MONTH is allowed, if premium is paid in advance for 3, 6 or 12 months respectively.

    The premium will be payable either up to the date of last premium fixed before maturity or up to the death of one of the spouses, whichever is earlier.

  • Claims : The sum assured along with accured bonus of the policies in full force will be payable to -

    a) the insurant at the end of endowment term i.e. date of maturity if both the lives survived.
    or ,
    b) the survivor on death of one of the spouses before the date of maturity.

    The survivor is absolved from payment of further premium
    c) the nominee/Legal heirs on death of both the insured lives simultaneously.

    Both the spouses should be healthy, confirmed A-I lives by the appropriate medical examiner and should be literate.

Children's Policy-2006

Children's Policy is newly introduced w.e.f. 20-01-2006 and applicable to both PLI/RPLI.

  • Object : To provide insurance cover to the two children of each policy holder provided that only one such policy will be allowed for an insured against one policy.
  • Eligibility : a) This is an independent policy, however this policy can not be issued of its own to any child. If the father/mother (insured) of the child has already taken policy or is proposing to take policy on their life either as whole life or endowmentAssurance for a sum assured not less than the sum assured of children policy then children policy shall be issued to such insured.
    b) Not more than one policy will be allowed for one child. The policy can be taken by insured for his/her own child only.
    c) Not more two children in a family shall be covered under this policy. Thesame child should not be covered under more than one policy.
  • Age Limit : a) The insured main policy shall not be aged 45 years and above at the time of taking/issue of children policy.
  • Limit of insurance : The minimum limit for insurance under this scheme shall be Rs. 20,000/-. The maximum limit of sum assured should be more than 1,00,000/-
  • Medical Examination : The policy shall be a non medical policy for a maximum sum assured of Rs. 1,00,000/- per child.
  • Risk Cover : Risk is covered from the date of acceptance of the proposal.
  • Loan : No loan is admissible to children policy.

  • Surrender : Surrendered and made paid up on usual conditions as applicable to main policy provided at least 5 years premiums have been paid. Amount is admissible as per surrender Table/Factor which would be a fraction of premium paid.
  • Term : The out standing term of main policy shall not be less than the premium paying period of children policy.
  • Claim : a) Sum assured shall be payable on children policy on its Maturity or earlier on death of the child.
    b) In the event of death of the insured before the expiry of the children policy, no further premium shall be payable for the balance period of the policy.

Any additional information can be obtained from Circle, Divisional office or Development, field officers and PLI Agents.

Wednesday, September 22, 2010

Govt announced bonus for non-gazetted employees who are not covered by any productivity linked bonus scheme

New Delhi, Sep 22 In a festival gift to non-gazetted central government employees, the Centre today announced a bonus of up to Rs 3,500 for 2009-10.

All the central government employees in Group C and D and all gazetted employees in Group B who are not covered by any productivity linked bonus scheme will get bonus equivalent to 30 days emoluments, Finance Ministry said in an office memorandum.

The payment will also be admissible to the Central Police and para-military personnel and personnel of armed forces, it said. Only those employees who were in service on March 31, 2010 and have rendered at least six months of continuous service during the year 2009-2010 will be eligible for payment, it said.

Meanwhile, the Central Government also issued notification for enhancing the Dearness Allowance for its 88 lakh employees and pensioners by 10 percentage points. This comes as a follow up to the approval given last week by the union Cabinet to hike the DA from 35 per cent to 45 per cent of the basic salary of the central government employees with retrospective effect from July 1, 2010.

The increase in DA comes just a few
days after the organised workforce was cheered by one percentage point increase in the interest rate on the provident fund to 9.5 per cent.

Tuesday, September 21, 2010

Postman to Become business correspondent in Department of Posts

India Post is all set for a facelift. The Department of Posts (DoP), represented by the unassuming postman, will shortly add another role for him as Postal Business Correspondent.

The postmen will not be only responsible for the delivery of the mails/ money order as they have been doing traditionally. Instead, they will work as the business correspondents of the India Post. They will sell other services of India Post like, speed post, registered post, logistics post, electronic money order [EMO], postal life insurance, and rural postal life insurance, saving banks etc.

India Post has unveiled an ambitious plan to train its 55000 postmen as the business correspondents to take on the challenges of market and competitors, chief postmaster general Mrs Hilda Abraham said at Bhubaneswar while inaugurating a five day “training of trainers” on Monday at the city-based B-school, Xavier Institute of Management (XIMB). Twenty five officers from different parts of the country are participating in training programme.

“XIMB will be training about 200 trainers of India Post to train the postmen. It is a gigantic task to train the all the postmen because of their huge number, diversity in their working languages, difficult working conditions, and more than 150 years of history of the department,” coordinator of the training programme and XIMB faculty, prof Niraj Kumar on Tuesday told “The ET”.

These trainers are being trained to train the postmen in skills in business etiquettes, customer relationship management, self initiatives and work planning. It is planned to convert postmen into a professional postal business correspondents by providing trainings in their business approach and also in their presentation skills.

“You should not be surprised if you find a smartly dressed postman delivering you a speed post with all professional business etiquette,” added Prof. Kumar.

In its bid to bridge the gap of about Rs 6000 crore in revenue generation and expenditure, Indian post is looking to tap the non-core business opportunity to enhance its revenue generation. “Our government has made a lot of capital investment in India Post, particularly in 11th plan, and now we need to take benefits of those investments. This is right time to grab the opportunity to give good competition to competing organization not only in our core business, mail delivery but also in other services which we are offering. Our postmen could be the brand ambassador of India Post" Mrs Abraham said.

“Entire country has been divided in to four regions and during the initial phase 50 officers from each region will be trained who will have responsibility of training of the postmen of given region. While selecting the potential trainers, India Post is ensuring that all the language and geographical conditions are adequately represented” informed Prof. Niraj Kumar.

XIMB had done a detailed training need analysis of the postmen before developing the training module. The B-school has done training need analysis of selected front line officers of India Post, like, assistant superintendent of posts (ASPs), inspector of post (IP), and postmen. In first stage, XIMB did the Training Need Analysis of all the Assistant Supdt. Of Posts (ASPs) and Inspector of Post (IP) the middle level most crucial cadre of India Post.

“We identified rural marketing and marketing communication skills, team building and leadership skills, selling techniques and target setting and creating and managing appropriate management information system as the major issues and accordingly trained more 250 officers from across the country”, Mr Kumar said.

In second stage, XIMB did the training need analysis of Postmen and decided to put the trained officers on the job to train the postmen as the postal business correspondents. As the postmen meet many customers personally, it will be easier for them to have one to one communication and to convince the customer.

“Postmen know customers and their requirements very well. In rural areas they are still part of the rural community and with such a huge network, postmen can play a crucial role to increase contacts with customers and increase business”, Mr Kumar added.

The union government has already earmarked Rs 1877.20 crore for the deployment of the information communication technology (ICT) network over a three year period covering 2010-13. The government is also mulling to give banking license to India Post. The postal department already works as a quasi bank, providing a host of savings products, postal life insurance, pension payments and money transfer services through its 1.55 lakh branches, more than any other bank.


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