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Milliman White Paper Employee benefits in India: An introduction Ravi Shekhar, CFA, (ICFAI), APA India is a unique conundrum. With employment opportunities galore and an open war for talent, employers are trying to find innovative ways to win over the 60% of the population that is under the age of 25. Indian companies historically have provided employee benefits such as health coverage, leave benefits and statutory retirement programmes. These were provided by old economy sectors dominated by manufacturing firms, engineering companies, government-owned enterprises and others. They were targeted towards a generation who believed and adhered to the concept of lifelong employment. However, as the economy grew, people…show more content…
Recently, the insurance regulator issued instructions as a result of which new members may not be admitted until the regulator has announced new regulations governing the plans. Once those regulations are released, the insurers will need to restructure their products to be in compliance before the employers can offer the benefits to new employees.2 iii. Pension plans: Legacy pension plans in India are limited to certain industries (like banks, mines, plantation, railways and others) or were created in other cases as a result of union pressures. Very few private companies sponsor pension plans in India. 2 IRDA has issued new guidelines in March 2013, and insurance companies are working towards adhering to them and opening the superannuation plans for new members after the changes. Milliman White Paper iv. Gratuity – This is a defined benefit plan, mandated by law (Payment of Gratuity Act) that provides a minimum lump-sum payment of 15 days for each year of service. It is applicable to all employers with more than 10 employees. The benefit is tax free up to Rs 1,000,000. year or face the risk of diminished employee satisfaction. There is an urgent need to develop long-term measures and metrics which would help in containing costs and ensuring effective management of health benefits. Indian tax laws also contain a
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