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Committee on Insurance and Pension
The Institute of Chartered Accountants of India
(Set up under an Act of Parliament)
‘ICAI Bhawan’, PO Box No. 7100, Indraprastha Marg, New Delhi – 110 002
www.icai.org
Insurance Portal of ICAI www.insuranceicai.org
elephant
Insurance and Pension Update
This update has been
endeavored to cover news
related to India with a focus
on insurance and pension
sectors.
Update: 5th December, 2008
Insurance and Pension Update
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Top Story
SEBI RESTRICTS EARLY EXIT FROM CLOSE-ENDED MUTUAL FUNDS
Mumbai
The Economic Times | Business Standard | Mint | The Hindu | The Tribune | The Telegraph | The
Asian Age | Deccan Chronicle | Hindustan Times |
The Securities and Exchange Board of India (SEBI) on Thursday said investors won't be allowed to
exit from close-ended mutual fund schemes before maturity and asked fund houses to list them on
stock exchanges.
The market regulator also said all such funds must invest in instruments in line with their maturity
profile.
"For all close-ended schemes, no early exits will be provided by the funds," SEBI Chairman C B
Bhave told a media briefing following a board meeting earlier in the day. "All schemes will have to be
listed on the stock exchange," he added.
The decision comes in wake of a liquidity crisis faced by the industry two months ago as investors
pulled out from fixed income funds fearing their credit quality.
More than Rs 90,000 crore flowed out of debt funds during the period, creating a liquidity crunch for
the Rs 4 trillion industry and forcing the central bank to offer money through a special money market
operation to ease the pressure. Under its special repo auction, the central bank is offering Rs 60,000
crore to banks. Funds, in turn, can borrow money by swapping their large but illiquid holdings of bank
debt for cash.
The regulator also extended the validity period of initial public offers to one year from three months
now.
Life-Insurance
TATA AIG’S NEW OFFERING
DNA
Tata AIG Life Insurance Company Limited announced the launch of Tata AIG Life InvestAssure
Optima- a Unit-Linked Insurance solution which offers a balance of guaranteed additions and high
allocation rates while providing comprehensive insurance protection. The plan claims guaranteed
additions up to 200 % of the annualized regular premium paid, at the time of maturity or death of the
life insured by way of additions to the fund value.
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INSURANCE FIRMS STEP UP USE OF EMOTIONAL HOOKS IN CRISIS TIME
Gouri Shah, Mumbai
Mint
Insurance companies have launched a slew of advertising and branding initiatives intended to forge
bonds of empathy with the people of Mumbai after last week’s terrorist attacks. They have been
sending SMSs and emails and calling customers to drive home the point, albeit gently. And they have
actually been inviting those affected to register their claims, instead of the other way around, which is
usually the case.
Sample this: “ICICI Prudential is with you in this time of crisis in Mumbai. To register any claim please
call 24x7 toll free on 1800222020.” Another one read: “The tragic events in Mumbai remind us how
precious life is. We r with u always. SMS FG to 567678 for total insurance solutions or claims, if any.
Future Generali.”
Others, such as HDFC Standard Life Insurance Co. Ltd and Bharti AXA General Insurance Co. Ltd,
also reached out to their customers through similar channels to show that they cared. Some, such as
National Insurance Co. Ltd, are building brand awareness via rousing print ads: StandUpUniteWalk’—
Mourning the departed and saluting the brave.
For the insurance sector, caring in the physical and emotional realm has become its second new
brand and category trigger, close on the heels of the financial safety and security hooks that it started
throwing just recently at customers with the financial meltdown. Terrorism covers, of course, promise
to be a growing revenue stream for the insurance sector.
Everyone is striving to strike empathy in the first step, though. “Here is a chance to make good our
promise...” says Milind Joshi, Bharti AXA’s senior vice- president, operations and claims, explaining
that insurance agencies could use this opportunity to facilitate the claim process and be seen as
delivering on promises.
“While a claim is a common issue, it’s important that we show empathy at this time. If you (customer)
haven’t been affected, great! If you have, we are here to stand by you, thereby making it easier to
forge long-term relationships with customers, an important consideration in the crowded Indian
insurance market. Yes, it is an opportunity…but it is also a responsibility,” he says.
Which is probably why a number of insurers are going that extra mile to reach out to customers. ICICI
Prudential Life Insurance Co. Ltd, for one, has been sourcing names of people affected in the terror
attacks from government agencies, hospitals and the police.
The company also extended its customer outreach through its call centre, which is processing claims
24x7 compared with the regular 9am to 9pm shift six days a week. And it is offering to send people to
customers’ homes to help facilitate the claims process.
“At a time like this, few people are comfortable doing this over the phone. Which is why we also offer
to send someone across and help them complete the claims process. Under other circumstances,
they would be expected to come by our office,” says Poonam Bhardwaj, senior vice-president and
head, underwriting and claims, ICICI Prudential Life Insurance. The company has in the last year
developed its strategy for such situations, following terror attacks in other cities such as Jaipur, Delhi
and Bangalore.
In the coming days, experts say, a number of brands could use this opportunity to gain consumer
attention by riding on the back of the terror attacks, an issue that is both important and topical. Like
the economic crisis, the recent spate of terror attacks in India have provided these companies with an
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opportunity to reach out to newer customers and create awareness about new or existing products
that cover terror attacks or other emergencies, they add.
Media buyers say this is a good time for insurance agencies to play up emotional hooks. Traditionally,
the December-March period is considered peak season for the insurance industry, because of which
a significant portion of the ad budget is also deployed at this time.
Chandradeep Mitra, president of Mudra MAX, the Mumbai-based media specialist of the Mudra
Group, said insurance in India has historically been seen as a tax-saving instrument. So, for a long
time, the entire cycle—in terms of advertising, marketing, promotions or otherwise—has been skewed
towards the January-March period, leading up to the end of the fiscal year, that accounts for up to
80% of ad spending in this sector.
In the fiscal year ended in March, this sector spent about Rs 400 crore on advertising, says Mitra.
Some of the top spenders were Life Insurance Corp. of IndiaLtd, HDFC Standard Life, Reliance Life
Insurance Co. Ltd and ICICI Prudential Life Insurance. This year, ad expenditure is likely to grow,
experts say.
As of August, the sector had already spent an about Rs 138 crore on advertising. This was more than
double the amount spent last year (Rs 63 crore) during the same period. Some of this was driven by
the entry of new firms, such as Aegon Religare Life Insurance Co. Ltd, and Canara HSBC Oriental
Bank of Commerce Life Insurance Co. Ltd. Meanwhile, Max New York Life Insurance Co. Ltd raised
its ad budget this year as a key sponsor of the Indian Premier League cricket tournament, Mudra’s
Mitra said.
BHARTI AXA OPENS 3RD BRANCH
Ranchi
The Pioneer
Bharti AXA Life Insurance Company Limited opened its 3rd Branch in Dhanbad. In addition to the
branch network, Bharti AXA life has extended presence in Airtel Relationship Centre (ARCS) to be
able to reach out to the customers effectively.
RELIANCE LIFE ON HIRING SPREE
New Delhi
Financial Chronicle Business Standard The Times of India The Economic Times Hindustan
Times The Indian Express Metro Now Mail Today
Bullish on growth of the insurance sector, Reliance Life Insurance is set to hire 2,500 managers,
besides 90 thousand advisers in the next four months.
"We are planning to add close to 2,500 employees and 90,000 advisers by the end of March next
year," Reliance Life Insurance Chief Executive Officer P Nandagopal said.
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With the fresh recruitments, the total number of advisers would cross three lakh while total staff
strength would be over 28,000, he said.
During the first eight months of the current fiscal, Nandagopal said the company has recruited over
40,000 advisers and added 8,000 employees in the sales functions.
Advisers are not on the payroll of the company. They work on commission basis.
"Despite the growth momentum witnessed by the industry over the past few years, the potential for
future expansion remains as strong as ever, thanks to low penetration levels, attractive
demographics, robust economic prospects and increasing investor awareness," he said.
The recruitment plan is in line with the growth objective of the company, he said.
On the growth in the business, he said, the company has been growing its business at the rate of 126
per cent, more than double the rate of the private sector industry.
RELIANCE LIFE PLANS FOREIGN EXPANSION
Mumbai
The Financial Express The Hindu Business Line
Reliance Life Insurance, the country's fourth largest private life insurer, wants to expand overseas. To
begin with, Reliance wants to set up branch offices in the Middle East, but the plan is to tap countries
with a large Indian workforce. The state-owned Life Insurance Corporation of India is the only player
with offices and subsidiaries outside the country. Reliance has approached Insurance Regulatory and
Development Authority to guide its overseas expansion plans as there are no regulations regarding
the same as of now.
General-Insurance
INSURERS GETTING MORE QUERIES ON TERROR COVER
Remya Nair, K Ramkumar, Mumbai
The Hindu Business Line
Seafood exporter Gul Kripalani never thought about an insurance cover against terror attack until last
week. He has his unit near Colaba Causeway, the epicentre of last week’s terror attack in Mumbai.
Now he is thinking of taking a comprehensive insurance policy that covers terrorist attack.
“We feel it is prudent to avail a terror insurance cover for our properties. Though we have not taken a
terror insurance cover as of now, we will definitely consider taking a policy when we come across a
good proposal”, said Gul Kripalani, Chairman and Managing Director of Pijikay Group of companies, a
seafood exporting company.
The Mumbai terror strikes have brought into sharp focus the necessity of having a cover to take care
of the risks arising on this front. While large corporates are well aware of this cover, post-the Mumbai
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incident, general insurers such as ICICI Lombard, IFFCO Tokio, and Future Generali have reported
stepped-up enquiries from SMEs and individuals.
“Post-the Mumbai incident, awareness among people has increased. Earlier, only select corporate
houses went in for a terrorism cover. But now, business establishments irrespective of their size are
taking this cover. Even on the retail side, customers are making it a point to enquire if their personal
accident cover has terror cover included in it. During the past attacks, there was not much awareness
since most of the targeted areas were public property,” said Deepak Sud, Chief Executive Officer,
Future Generali India Insurance Company.
Future Generali, according to Sud, has been advising its existing clients to go in for the terrorism
cover.
“We have started getting proposals from our existing corporate clients to include terrorism in their
cover", said Vijay Mehrotra, Country Head Retail, IFFCO Tokio General Insurance Company.
Terrorism cover can be given for property or personal accident. It is offered as an add-on cover and
an individual has the choice to request the same while insuring property. Similarly, personal accident
cover for terrorism could encompass accidental death, total disability, loss of limbs, loss of a sensory
organ, partial disability or loss of pay due to disability.
“The number of individuals opting for terrorism insurance is on the rise due to heightened awareness,
especially in sensitive geographies prone to acts of terrorism,” said Rajive Kumaraswami, Head-
Reinsurance, ICICI Lombard, in an e-mail response.
HYUNDAI OFFERING FREE INSURANCE
New Delhi
The Hindu Business Line
Hyundai Motor India Ltd, the country’s second largest car maker, on Thursday said that it would be
offering free insurance, exchange bonuses and free car accessories across its model range during
the current month. As an incentive to buy its cars, the company would now be offering its flagship
model Santro, which was introduced in 1998, at an introductory price of Rs 2.99 lakh. In addition the
company is also offering exchange bonus and a loyalty scheme up to Rs 20,0 00 on its models.
“The schemes announced will provide our customers with an attractive value for money proposition
and with the prevailing economic conditions this should provide an impetus for our sales and offset a
part of the ownership cost which has gone up considerably in the past few months,” said Arvind
Saxena, Senior Vice- President, Sales and Marketing, Hyundai Motors India in a statement.
COURT SLAPS FINE ON INSURANCE COMPANY
New Delhi
The Hindu
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The Delhi High Court on Thursday slapped a fine of Rs.25,000 on New India Assurance Company for
filing a frivolous petition opposing grant of a compensation of Rs.1.25 lakh to the family of a cyclist
who was run over by a truck in North-West Delhi in 1981.
A Motor Accident Claims Tribunal here had granted the compensation of Rs.1.25 lakh to the family of
the deceased. The insurance company challenged the decision in the High Court, submitting that the
Tribunal had erred in calculating the compensation. The victim is survived by his wife and two
children.
Dismissing the plea of the insurance company, Justice V.B. Gupta imposed a fine of Rs.25,000 on it
for filing a frivolous petition and wasting the precious time of the Court.
CYCLONE EFFECT: SPOTLIGHT ON CROP INSURANCE
Niranjana Ramesh, Chennai
The Economic Times (Chennai edition)
Crop insurance schemes introduced in 2000 by the Agriculture Insurance Company of India (AIC), an
SPV supported by the Union and state governments, are expected to gain traction in Tamil Nadu this
year, thanks to cyclone Nisha, that lashed at the state’s granary districts of Thanjavur, Tiruvarur and
Nagapatinam last week.
While the area of crop insured has been raising steadily ever since the state government announced
a 50% subsidy on insurance premium in 2005, this year, it is expected to double following an
extension of deadline for paying the premium.
As these areas grow almost only food crops, particularly, paddy, the only insurance is available from
AIC. Some companies provide agriculture insurance for cattle and poultry, for cash crops and for farm
machinery. But, in the domain of crop insurance, AIC has a near 100% market share in the Cauvery
delta.
For those farmers who go in for formal credit from commercial banks, the bank deducts the insurance
premium from the loan, as per the farmer’s preference. This also insures the bank’s loan to a certain
extent. “Usually, about 40% of the farmers go in for formal credit, and only 20% for insured credit,”
says Cauvery farmers protection association general secretary V Dhanapalan. “The number of
insurances not tied to loans has been negligible till 2005, when the premium subsidy scheme started
improving the culture of insurance.”
Often, the benefits of insurance are outweighed by the non-affordability of a monthly premium to the
tenants who are the majority cultivators of lands in TN. “Two thirds of the cultivable land in TN is
owned by temples. Mostly, the tenancy is not properly established by documents, as there could even
be secondary tenants cultivating some lands,” says Cauvery delta farmers association secretary
Ranganathan. In the absence of such documents, obtaining an insurance for one’s crop can get
bothersome. However, this year, the fury of Nisha has superseded all such concerns, even bringing to
the forefront a demand by the associations to extend the deadline to pay the premium.
“Normally, it is not allowed to a insure a property after the damage has occurred. But, we thought this
would be a good start for the practice of insuring one’s crop,” says AIC TN regional manager
Anbarasu. The company collected Rs 20 crore premium from the whole state last year, almost double
of the Rs 11.63 crore that they collected in 2006-07. That was a good year, and it had to pay claims of
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only Rs 7.88 crore. But, last year, the heavy monsoons warranted them to shell out Rs 279 crore on
claims.
“As per our assessment so far, we expect to be paying Rs 300 crore this year. But, we expect our
collection to go up to Rs 40 crore, as we have extended the deadline to December 15 from the regular
date of November 30,” Mr Anbarasu says.
OBEROI, TRIDENT HAD COVER OF RS 1,430 CRORE
New Delhi
The Economic Times (Delhi edition)
The two landmark properties of Oberoi Group—The Trident and The Oberoi—that came under
terrorist attack last week have a total insurance cover of Rs 1,430 crore, but the cost of damage is still
being assessed. “Both the hotels are insured and every year there is a professional revision of the
value of the property. The two properties are fully insured, barring the land,” said Oberoi Group vice-
chairman S S Mukherji.
DEMAND FOR TERROR COVER LIKELY TO RISE, BOOSTING PREMIUM RATES
Teena Jain, New Delhi
Mint
Demand for insurance cover for terrorism is likely to rise in the wake of Mumbai attacks—even in
smaller cities—and premiums for such cover would also increase, say experts.
“One can expect the demand for terrorism cover to go up... In India, the cover is taken by only a few
major hotel chains. The incident (Mumbai terror attack) can create awareness and raise demand for
such products (even in small cities),” said R. Krishnamurthy, managing director of Watson Wyatt, a
consultancy that provides actuarial advice to its clients. Actuaries correlate statistical calculations,
especially of life expectancy, required to arrive at insurance probabilities.
Cover against terrorism is typically offered as an add-on with property insurance, but is also available
as a stand-alone for individuals.
As many as 12 Indian cities, including Mumbai, have suffered acts of terrorism in the past seven
months, and the frequency of such attacks have quickened in the past two years, Mint reported on
Thursday.
According to Rajive Kumaraswami, head, reinsurance, ICICI Lombard General Insurance Co. Ltd, the
number of individuals and firms opting for terrorism insurance “is on the rise due to heightened
awareness”.
The increased demand will lead to a rise in premiums for such policies, said Deepak Sood, chief
executive of Future Generali India Insurance Co. Ltd. “With frequent terrorist attacks, it can be revised
now,” he said.
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T.A. Ramalingam, head, underwriting, Bajaj Allianz General Insurance Co. Ltd, said: “The premium
rates (for terrorism insurance) are determined by the pool managers and the owners jointly. It is
difficult to say at this stage what would be the immediate impact on rates. Considering the fact that for
the past six months we seem to be having terrorist attacks frequently, there could be a review of
(premium) rates.”
“Generally, it has been the trend that the demand surges whenever there is a tragic event,” he added.
India’s Insurance Regulatory Development Authority has mandated that all general insurance
companies collect premiums from terrorism covers in a common pool.
Terrorism-related insurance claims are settled using funds from this common pool, created after the
World Trade Centre attack in the US in 2001 when overseas reinsurers stopped underwriting risks.
Currently the pool is worth Rs 750 crore.
Reinsurance companies provide insurance to insurers.
“We will need more reinsurance support for terrorism covers,” said Watson Wyatt’s Krishnamurthy.
YOUR TRAVEL INSURANCE PLAN MAY SKIP LOSS DUE TO TERROR
Preeti Mishra, Sneha Shah, Bangalore
Financial Chronicle
If you are travelling abroad, it would be wise to review the coverage offered by the insurance
providers. Most of the general insurers do not include loss due to acts of terrorism under the travel
insurance products that they offer, and the insurance regulator, Insurance Regulatory and
Development Association (Irda) of Indian, has no teeth to make this mandatory.
Of the 20 general insurers in the country, only a handful offer a hijack distress allowance which
typically provides coverage ranging between $100-125 per day.
But in the light of the recent terror attacks, some of them are considering launching travel insurance
products with variants that would include coverage for such incidents.
Future Generali India Insurance Co chief executive Deepak Sood said, “Terror cover is normally
included in the travel cover with people travelling abroad taking it unless specifically excluded.”
However, general insurance players offering travel insurance only provide for a hijack distress
allowance, and that too depends on the type of policy that a customer opts for. For instance, a
customer opting for a standard travel insurance policy will only have baggage and mediclaim, while a
platinum, gold and silver variant offers the hijack allowance with varying coverage.
A senior executive from Bajaj Allianz General Insurance said, “Terror is covered under travel
insurance and it is not restricted to just hijack of the person insured."
But, insurers are undecided as to what the definition for terror is. The IRDA has not codified terrorism
in the (insurance) business norms.
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"We cannot standardise the definition, and have not had anyone approaching us for this. Both the
parties (insurer and insured) need to define what terrorism (is) and what coverage can be given," says
Prabodh Chander, executive director-non life, IRDA.
According to the insurance regulator, it can only check and review the coverage’s under the products
offered by companies to "ensure that insurance firms offer what they have promised in the product
catalog.
Some insurers though like Reliance General Insurance Co Ltd and Bharti Axa are trying to address
this gap. While Reliance General Insurance offers terrorism coverage, depending on the country of
visit, Bharti Axa is in the process of launching travel insurance products that would offer hijack
allowance and coverage for loss due to terrorism.
NATIONAL INSURANCE COMPANY LAUNCHES MICRO-INSURANCE PRODUCTS IN GUJARAT
Vadodara
The Indian Express
The National Insurance Company (NIC), one of the leading public sector insurance companies of
India, has decided to capture the untapped market of micro-insurance through their own health
insurance products in the state.
Micro-insurance is a term used to refer to insurance characterised by low premium and low caps or
low coverage limits. It is designed to service low-income people and businesses, not served by typical
social or commercial insurance schemes Gujarat has around 20 lakh BPL families, and so far, not
even 10 percent of them have been covered, according to sources.
NIC has decided to cover the urban and rural BPL families through their products called Swasthya
(health) and Suraksha (life).
The company says that though they are a commercial entity, they have undertaken the project as part
of their corporate social responsibility.
The company, with the help of NGOs, will adopt villages in the rural areas. The two policies, Gramin
Swasthya and Gramin Bima policy, will take off from Himmatnagar. It will encompass all the benefits,
INSURANCE FIRM TO PAY UP FOR NOT SETTLING CLAIM
Chandigarh
The Indian Express
The District Consumer Disputes Redressal Forum has directed Reliance General Insurance Company
to pay Rs 1 lakh as medical reimbursement and Rs 25,000 for harassment for not paying claim.
The complainant, Advocate Rajesh Garg, said his father M L Garg had a mediclaim insurance policy
issued by the Reliance General Insurance. It was a group insurance policy issued to practicing
advocates of the Punjab and Haryana High Court.
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The policy was valid for one year. Meanwhile, the father of the complainant suffered a cardiac arrest
and passed away in May 2008. The complainant stated he spent Rs 6,37,350 on the treatment of his
father but the insurance policy was only to the maximum insured amount of Rs 1,00,000.
Health-Insurance
DHANALAKSHMI BANK LAUNCHES INSURANCE FOR SABARIMALA PILGRIMS
Kochi
The Economic Times (Chennai edition)
Thrissur-based Dhanalakshmi Bank has partnered with Oriental Insurance Company to provide
medical insurance cover for Sabarimala pilgrims.
‘The Dhanam Oriental Sabari Insurance Policy’ is being sold through all branches of the
Dhanalakshmi Bank. The bank has opened special counters at Erumeli, Nilakkal, Pampa and the
Sabarimala for the service of devotees. The devotees can buy medical insurance cover at a premium
of Rs 40. The period of cover in the policy is 60 days. The policy is designed for the Sabarimala
pilgrims in the age group of 5-70 years.
MAKE HEALTH INSURANCE MANDATORY: HEGGADE
Mangalore
Deccan Herald
Emphasising on the need for health security in the modern age, Dharmasthala Dharmadhikari Dr D
Veerendra Heggade said the government should make health insurance mandatory to all individuals.
He was speaking during the inaugural of the newly established B A Hospital and Training Centre, a
subsidiary of Mohiudeen Educational Trust at Thumbay near Bantwal on Thursday. Dr Sheikh Majid
Bin Saeed Al Nuaimi of Ajman, United Arab Emirates, inaugurated the state-of-the-art hospital.
Dr Heggade said awareness on health insurance held significant in the present society since the
health requirements of the people were going expensive day by day. “The benefits of health insurance
should reach even common men. Government should make this mandatory to all,” he observed.
On behalf of the rural development project of Dharmasthala, as many as 9.32 lakh people have got
health insurance, while Rs 9.65 crore has been given for 230 networking hospitals in five districts for
fulfilling the health expenses of the insured, he informed.
Re-Insurance
INSURANCE GROWTH IN INDIA TO SLOW DOWN
Mumbai
The Financial Express
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Swiss Re, the largest reinsurnace company, has said that insurance in the emerging markets is
expected to grow at a slower pace in 2008 and 2009, but its longer term growth prospects remain
positive.
In India growth of new business in life insurance fell from 145.7% in 2006 to 9.6% in 2007. Annual
growth is likely to drop from the 2002 to 2007 levels of 11.4% in life and 10.6% in non-life to 7-10% in
life and 3-8% in non-life between 2008 and 2013, said the company its latest Sigma report. Growth in
the life market slowed from 18% to 14% in 2007. Premium volume in 2007 amounted to $223billion.
The strong performance of the stock markets in the first three quarters of 2007 led to increased sales
of investment-linked life products.
The launch of new products and the increasing market share of bancassurance, the provision of
insurance services by banks, also contributed significantly to the sector's results.
Most of the regions decelerated only marginally from their record high levels of the previous year. In
South and East Asia, Indonesia (+57%) grew the fastest in 2007. In real terms, emerging market
premiums in the non-life sector grew by 11.6% in 2007. Premium volume in 2007 amounted to $199
billion. South and East Asia (+13%), Eastern Europe (+12%) and the Middle East (+12%) grew the
fastest.
Pension/PFs
CENTRE TOLD TO RECONSIDER FREEDOM FIGHTER’S PENSION PLEA
Chennai
The Hindu
The Madras High Court has directed the Union Government to consider the case of a 93-year-old
freedom fighter, who moved the court seeking a direction to the authorities to reconsider the matter of
Swatanthra Sainik Sanman Pension (SSSP) to him based on his original application of 2002, and
grant the pension within eight weeks.
In his order, Justice K.Venkataraman said the Union Government, represented by its Secretary,
Public (Political Pension) department, Ministry of Home, cited as the first respondent, could not keep
the petitioner waiting endlessly. The petitioner was stated to be 93 years old and he could not be
driven from pillar to post to get what he was entitled to.
S. Kalimuthu submitted that he had participated in the Quit India Movement. Due to his participation in
the freedom struggle, the police issued a detention order against him. He went underground for a
year.
The State government granted him freedom fighter’s pension in 1994. He applied for the SSSP, better
known as Central Government Pension for freedom fighters. The State government recommended his
case. However, by an order in 2004, the Centre rejected his request stating he had not produced
acceptable documentary evidence and the non-availability of record certificate had not been issued by
the State government in the prescribed format. If the petitioner submitted acceptable documentary
evidence, his request would be considered.
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BADAL PLANS CONTRIBUTORY PENSION SCHEME ON CENTRAL LINE
Chandigarh
The Financial Express
The Punjab government plans to introduce a contributory pension scheme for its employees on the
lines of Central government’s pension scheme.
A decision to this effect was taken at the state Cabinet meeting held on Wednesday, considering the
mounting expenditure on salaries and pension for government employees in Punjab, which accounts
for more than 50% of total revenue receipts in the state.
The scheme will be introduced with retrospective effect from January 1, 2004 and will cover all
employees who had joined the service after this date.
The SBI Pension Funds, the National Securities and Depository Limited (NSDL), UTI Retirement
Solutions Limited, LIC Pension Fund Limited, Bank of India and New Pension System Trust are being
engaged as “service providers” for this purpose. The Cabinet, which met on December 3, under chief
minister Parkash Singh Badal, gave its approval to this proposal.
The scheme is exactly on the lines of the Pension Fund Regulatory Development Authority (PFRDA)
of Central government. Principal secretary finance has been designated as ‘authorised signatory’ to
sign the agreement on behalf of Punjab and also director treasuries and accounts in the department
of finance (FD) as ‘Designated Authority’ under the New-Restructured Defined Pension Contribution
Scheme (NPS), which would be introduced to all the employees of the Punjab government who had
entered service on or after January 1, 2004.
Sources in the Punjab finance department told that the new defined contribution pension scheme
would replace the existing system of defined benefit pension system. The scheme would be
mandatory for all government servants joining service on or after January 1, 2004 and the employees
will have to make a contribution of 10% of the basic pay, DP and DA, which will be deducted from the
salary, every month. The government will make an equal matching contribution. The existing
provisions of defined benefit pension and PF will not be available to the government servants, joining
service on or after January 1, 2004.
MORE CLAIMS FOR PROV FUND: MORE LAYOFFS?
Ranjani Raghavan, Pune
The Indian Express
The number of claims filed by people to withdraw provident fund clearly indicates that the last few
months have seen a significant number of people losing their jobs. There has been a sharp rise in the
number of claims in the past 12 months or so. While the year 2007 saw between 19,000 and 21,000
claims, there were as many as 33,000 this November.
Industry sources say that actual layoffs happened only after September, but the provident fund claims
filed by people have been on the rise a few months prior to that.
“The trend has been rising. In 2007, the average number of claims was between 19,000 and 21,000.
But in the last few months, the number of claims has risen to 32,000 to 33,000, which is a significant
rise,” said EPFO regional commissioner, Francy Joseph.
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Insurance and Pension Update
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Disclaimer
Information published in the newsletter are taken from publically available sources and believed to be
accurate. COIP of ICAI takes no responsibility of accuracy and reliability of information published in
the newsletter. No part of this newsletter may be reproduced, stored in a retrieval system, or
transmitted in any form or by any means – electronic, mechanical, photocopying, recording, or
otherwise without the permission of COIP of ICAi.
For Any Query:
Committee on Insurance and Pension of ICAI
Tel: 91-11-30110439
Fax: 91-11-30110583
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