Companies Go For Corporate NPS As Traditional Plans Fade

Provident fund and gratuity seen as inadequate, while superannuation funds aren't portable

- Priyamvada C. & Devina Sengupta

Indian companies are restructuring retirement plans and looking beyond conventional statutory benefits like provident fund and gratuity, as the corpus often proves inadequate for superannuated employees.

Firms are now increasingly looking at corporate National Pension System (NPS), and investment options with private insurance companies as they look to make the retiral benefits more attractive and retain employees for long.

"Traditional statutory benefits, like the provident fund and gratuity, are crucial but often fall short of covering the financial needs of employees in their post-retirement years," said Ritobrata Sarkar, head of retirement, India for WTW—a global advisory, broking and solutions company.

In fact, superannuation, which typically takes place when the employee turns 58-60 and the employee is eligible for a certain number of benefits, is also seeing a change.

"Superannuation plans are not portable when employees switch jobs, unless the new employer also offers a superannuation plan, which can be a drawback. Second, setting up a separate trust for superannuation adds to the compliance and administrative burden, making it less attractive for companies," Sarkar told Mint.