What is super annuation?
Now a days, corporate have two sections in the compensation package. One of them is Gross Annual Income and the other is Cost To Company(CTC). Super Annuation is a fund maintained by the employer on behalf of all its employees. An employee needs to stay for more than 3 years in an organization to get the full benefit of super annuation fund.
Amount invested in super annuation fund per year by employer for employee = 10% of basic sal.
Duration of employment and super annuation benefits:
IF employee stays in a company < 1 year, he get no amount from super annuation.
IF employee stays in a company for 1 -2 years, he gets 50% of amount + interest earned on his super annuation contribution.
IF employee stays in a company for 2-3 years, he gets 75% of amount invested + interes earned on his superannuation contribution.
IF employee stays in a company for > 3 years, he gets full amount invested + interest earned.
When an employee leaves a company to another one, he can get his super annuation fund balance transferred to the new company. The interest earned per year on super annuation fund varies from company to company. Each company can choose from a bunch of group super annuation policies offered by insurance companies to employers.
When an individual stops working, he gets 33% of his super annuation fund in lumpsum and the rest of the amount will be given as monthly payments to the employee.
So this explains the reason for being in a company for a longer period. In today's world, people shift companies very often which is not advisable from career perspective as well as monetary perspective.
In the next article, lets see how gratuity also rewards long term employees.