Pension
India's Pension Fund Regulatory and Development Authority (PFRDA) was established in 2003 to provide adequate retirement income for citizens and encourage retirement savings. It administers and regulates the National Pension System (NPS), which is a voluntary, contribution-based retirement savings scheme that is structured into two tiers:
- Tier I - the non-withdrawable permanent retirement account into which the accumulations are deposited and invested per the subscriber's option.
- Tier II - a voluntary withdrawable account, which is allowed only when an active Tier I account is in the subscriber's name. The withdrawals from this account are permitted based on the subscriber's needs.
To enroll more employees who work in the informal and unorganized sector in a pension scheme, the Indian Government established a pension scheme within the NPS called the Atal Pension Yojana (APY). Under the APY, the government will match 50% of an individual's contribution up to INR 1,000 (Indian rupees) annually for 5 years.
The Employee Provident Fund (EPF) is compulsory insurance for employers with at least 20 employees and some organizations with over 50 employees. For companies with fewer than 20 workers, the program is voluntary. For employees with basic wages less than or equal to INR 15,000 per month, contributions are 12% of the monthly salary, and the employer contributes 3.67%. For employees with basic wages over INR 15,000 per month, the contribution is the same 12% of the monthly salary; however, the employer contributes 12%.
Dependents/Survivors Benefits
For work-related injuries resulting in death, survivors benefits are as follows:
- Spouse's pension - 60% of the disability pension the deceased received or was entitled to receive is paid to the widow(er). If there is more than one widow, the benefit is split equally.
- Orphan's and widowed mother's pension - 40% of the disability pension the deceased received or was entitled to receive is paid for an orphan younger than age 25 (no limit if disabled or an unmarried daughter) and widowed mother.
- Other eligible survivors pension - if there is no eligible widow(er), orphan, or widowed mother, up to 40% of the disability pension the deceased received or was entitled to receive is paid to other eligible survivors, including the deceased's father, widowed mother-in-law, grandparents; 20% for other dependents younger than age 18 (no limit for an unmarried female).
The minimum monthly combined survivor pension is INR 1,200. The maximum combined survivors pension is 100% of the disability pension the deceased received or was entitled to receive.
In the case of the non-occupational death of the insured person, survivors benefits will depend on the social insurance program of which the employee was a member.
Invalidity Benefits
In India, disability benefits may differ depending on which pension system an employee is a member of.
- Under the National Pension System, the monthly pension is based on the insured person's pensionable wages. In certain cases, it may be paid as a lump sum of total employee and employer contributions plus accrued interest. Benefits are adjusted annually by the central government based on an actuarial evaluation.
- Under the Employee Provident Fund, a lump sum of total employee and employer contributions (plus accrued interest minus previous withdrawals) is paid. Employees who are permanently and totally disabled are entitled to pension depending on their years of service.
- Under the Indira Gandhi National Disability Pension Scheme, a basic pension of INR 300 a month is paid. Additional amounts may apply and vary by state.
For employees who suffer a temporary disability as the result of a workplace injury, 90% of the insured person's average daily wages are paid for the duration of the disability (must last at least three days). There is no maximum duration of payments. Average daily wages are based on the insured person's wages in the last six months. Employees who suffer a permanent disability as the result of a workplace injury are eligible for a permanent disablement benefit, under which a monthly pension is determined based on the assessed loss of earning capacity.