LIC New Group Superannuation Cash Accumulation Plan

What Is the LIC New Group Superannuation Cash Accumulation Plan?

The LIC New Group Superannuation Cash Accumulation Plan (NGSCA) is a group retirement savings solution designed to help employers provide long-term financial security to their employees. It is a non-linked, non-participating plan, meaning it is not connected to the stock market and does not share the profits made by LIC of India, offering stable and predictable returns. The plan works like a pension-style group savings scheme, where employers make regular contributions on behalf of their employees, a fixed percentage, up to 15% of the employee’s basic salary and dearness allowance toward superannuation, to build a retirement corpus over time.

One of the key features of this plan is its annual renewal structure, which gives employers the flexibility to manage the policy and adjust contributions based on changing workforce needs or financial planning.

Key Features of the Plan

Dual Structure

The plan works for Defined Contribution (DC) and Defined Benefit (DB) schemes. LIC supports both formats, whether you want individual member accounts or a single group fund.

Guaranteed Returns

LIC offers a guaranteed Minimum Floor Rate (MFR) of 0.5% per annum, which means your fund will never stop growing.

Additional Interest Earnings

Apart from the MFR, LIC also credits an Additional Interest Rate (AIR) quarterly. From the 5th year onwards, you may also receive Residual Additions (RA), boosting your returns further.

Flexible Contributions

Employers can contribute at any time during the financial year, monthly, quarterly, or annually. There is no fixed schedule.

Employee Exit Benefits

The member (or their nominee) receives the full account value per the scheme rules on retirement, resignation, or death.

Policy Surrender

If required, the policy can be surrendered with 3 months' notice. LIC pays out the higher of the guaranteed or special surrender value.

Market Value Adjustment (MVA)

To protect long-term investments, LIC may apply MVA for large exits (over ₹10 crore or 25% of the fund annually).

No Market Risk

The plan is non-linked and non-participating, meaning your funds are not exposed to market volatility.

Eligibility Criteria

Benefits of the Plan

The LIC New Group Superannuation Cash Accumulation Plan provides financial security to employees as follows:

1. Upon Employees’ exit from service, whether due to resignation, retirement, termination, or death:

   The benefits differ based on the scheme chosen by the employer: Defined Contribution or Defined Benefit.

   Under Defined Contribution Scheme:

   • The exiting member's Individual Policy Account Value becomes payable, as per the scheme rules defined by the employer (Master Policyholder).

   • Once this benefit is paid, the member's Individual Policy Account is closed.

   • LIC's liability is limited to the funds available in the member's Individual Policy Account.

   Under Defined Benefit Scheme:

   • The benefit is paid from the Group Policy Account, per the scheme's rules.

   • If the Group Policy Account does not have enough funds, the employer is responsible for funding the shortfall before LIC can process the benefit.

   • LIC’s liability is limited to the available balance in the Group Policy Account for that member.

2. Tax Benefits

   The plan offers tax advantages for both employers and employees, as follows:

   For Employers:

   • Contributions to an approved superannuation fund are treated as tax-deductible business expenses.

   • Any income earned by the fund (such as interest or dividends) is tax-free.

   • Employer contributions up to Rs. 1.5 lakh per year are tax-free.

   For Employees:

   • Employee contributions are eligible for tax deduction under Section 80C, up to Rs. 1.5 lakh per year.

   • As per Budget 2020, the combined employer contribution to NPS, EPF, and superannuation fund is capped at Rs. 7.5 lakh annually. Any amount above this is taxable.

   • On retirement, one-third of the corpus withdrawn is tax-free. The remaining amount is tax-exempt if used to buy an annuity.

   • Payouts on death or injury are completely tax-exempt.

How Does the Plan Work?

The plan offers two structures for managing superannuation benefits. Employers can choose one based on their internal retirement policy:

1. Defined Contribution Scheme (DC)

   In Defined Contribution Scheme, the focus is on how much the employer contributes to each employee's retirement fund. Here's how it works:

   • Employees get a separate Individual Policy Account under the LIC plan.

   • Regular contributions made by the employer are credited directly to each employee's account.

   • These accounts grow over time as LIC credits interest annually based on fund performance, subject to a guaranteed minimum.

   • When an employee retires, resigns, or passes away, the entire account balance (including contributions + interest) is paid out to the employee or their nominee, as per the scheme rules.

2. Defined Benefit Scheme (DB)

   In a Defined Benefit Scheme, the focus is on the benefit promised to employees at retirement or exit, not the amount of contributions. Here's how it works:

   • All employer contributions are pooled into a single Group Policy Account managed by LIC.

   • The employer clearly defines the benefit amounts (e.g., a lump sum or pension) in advance in the scheme rules.

   • The employer must ensure there is enough money in the Group Policy Account to pay the promised payouts.

   • LIC only pays benefits from the available balance in the Group Account. If the account doesn't have enough to cover the promised amount, the employer or trustee must top up the account before LIC makes the payment.

   The plan functions like a group pension scheme, where employers contribute up to 15% of an employee’s basic salary and dearness allowance to a superannuation fund. Though paid by the employer, this contribution is part of the employee’s overall CTC.

   Employees can also make voluntary contributions under defined contribution plans. At retirement, up to one-third of the corpus can be withdrawn as a lump sum, and the rest is used to buy an annuity that pays regular pension income. If the employee changes jobs, the superannuation amount can be transferred to the new employer’s scheme. If unavailable, the employee may either withdraw the amount or leave it in the fund until retirement.

What Is LIC Superannuation Login?

LIC Superannuation login refers to the Group Customer/Annuitant Portal on LIC India’s official website. It’s a dedicated online platform for retired employees or pensioners to:

• Access their pension or annuity details

• View payment schedules and history

Here are the steps to access the LIC Group Superannuation Scheme Login:

Step 1: Visit LIC’s website and click on Group Business on the navigation panel.

Step 2: Select “Group Customer/Annuitant Portal”.

Step 3: Click “CLICK HERE for Group Customer/Annuitant Login”, which directs you to the login interface.

Once on the portal, you can proceed to log in or register, depending on whether you're an existing or new user.

Terms & Conditions

1. Proof of Age

   Before any benefit is paid, members must submit valid proof of age (e.g., Aadhaar, birth certificate).

2. Surrender Value

   The policy may be surrendered with 3 months' notice. LIC will pay Group Policy Account Value minus surrender charges (0.05%, max ₹5 lakh) and MVA.

3. Market Value Adjustment (MVA)

   MVA applies to withdrawals exceeding 25% of the account value or full surrender. There is no MVA for exits below ₹10 lakh.

4. Free Look Period

   The Master Policyholder has 30 days from receipt to review and return the policy if unsatisfied. The premium will be refunded after stamp duty is deducted. No interest applies.

5. Compulsory Termination

   LIC may terminate the policy with 3 months' notice if the balance drops below ₹1,00,000 or the number of covered Members is below three.

6. Pension Payouts

   On exit (retirement, death, resignation), LIC pays pension as per Scheme Rules. If funds are insufficient under DB Schemes, the Master Policyholder must make up the balance.

7. Annuity Rate Revision

   LIC may periodically revise annuity rates and share updates. Members' chosen annuity options must be informed to LIC within 90 days of exit.

8. Exit Notification Within 90 Days

   If exit intimation is received within 90 days of vesting, the vesting date annuity rate applies.

9. Delayed Exit Notification

   If submitted after 90 days, the annuity rate at the receipt date applies. The amount is deducted from the account as of the vesting date for DB Schemes.

10. Nomination

    Master Policyholder must maintain and update Member nominations. Benefits are personal and non-transferable.

11. Claims Process

    Required documents are a death certificate (if applicable), exit proof, claim forms, NEFT mandate, ID, age, and existence proof. For accidental death, an FIR and a post-mortem may be needed.

12. Information Provision

    Master Policyholder must submit accurate scheme and Member data.

13. Policy Amendments

    Changes to Scheme Rules require LIC's written approval. Either party may terminate the scheme with 3 months' notice.

14. Discharge of Payments

    All payments will be made to the Master Policyholder. A signed receipt will serve as a valid discharge for LIC.

15. Scheme Rules Supremacy

    In case of conflict between Scheme Rules and policy terms, policy conditions will override Scheme Rules.

16. Policy Inspection

    The Master Policyholder must present the policy document to LIC upon request when required.

17. Multiple Pension Providers

    If holding accounts with multiple insurers, the Master Policyholder may select any insurer to purchase annuities, per the Scheme Rules.

18. Duplicate Policy Issuance

    If the policy is lost, a duplicate can be issued upon payment of ₹500 (as of Jan 2024), submission of a notarised indemnity bond, and applicable documents.

Summing Up

The LIC New Group Superannuation Cash Accumulation Plan combines simplicity, compliance, and reliability in a group retirement savings plan. Its structure, guaranteed interest, flexibility, and LIC’s assurance make it especially appealing for companies aiming to build staff loyalty and financial security.

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