BSLI Gratuity Plan

Gratuity is a way an employer appreciates an employee's loyalty and service to the company. It is a lump sum amount paid out to the employee, upon his termination of employment, by the employer. The Government of India introduced the Payment of Gratuity Act, 1972, making it mandatory for all employers with more than 10 employees, to offer gratuity.

The gratuity liability for the employers increases on an annual basis, with an increase in the employee's salary and tenure at work. BSLI helps meet this liability with its Group Init Linked Plan (GULP) and Guaranteed Interest Credit (GIC).

BSLI Offerings

Group Unit Linked Plan (GULP)

Key Features:

Get more for less through efficient returns - We offer an opportunity to earn market-linked returns on the Gratuity Contribution.

Choose your fund. Choose your future - The Unit-Linked platform offers the benefit of ten investment funds

Investment Fund	Risk Profile	Asset Allocation	Min.	Max.

Group Fixed Interest	Low	Debt Instruments, Money Market and Cash Equities and Equity Related Securities	100% 0%	100% 0%

Group Bond	Medium	Debt Instruments, Money Market and Cash Equities & Equity Related Securities	100% 0%	100% 0%

Group Gilt	Low	Debt Instruments, Money Market and Cash Equities & Equity Related Securities	100% 0%	100% 0%

Group Secure	Medium	Debt Instruments, Money Market and Cash Equities & Equity Related Securities	80% 10%	90% 20%

Group Stable	High	Debt Instruments, Money Market and Cash Equities & Equity Related Securities	65% 20%	80% 35%

Group Growth	High	Debt Instruments, Money Market and Cash Equities & Equity Related Securities	50% 30%	70% 50%

Group Floating Rate	Low	Debt Instruments, Money Market and Cash Equities & Equity Related Securities	100% 0%	100% 0%

Group Protection	High	Debt Instruments, Money Market and Cash Equities & Equity Related Securities	100% 0%	100% 0%

Group Money Market	Very Low	Debt Instruments, Money Market and Cash Equities & Equity Related Securities	100% 0%	100% 0%

Group Short Term Debt Fund	Very Low	Debt Instruments, Money Market and Cash Equities & Equity Related Securities	100% 0%	100% 0%

Manage your risk with protection fund option - At the time of inception of the policy, we also offer you an opportunity to preserve your capital.

Initial Allocation - We offer unique value added benefit of additional units up to 5% of the initial contribution.

Feel free to Switch Funds - To enable you to manage the risk and optimize the returns based on market performance, you have the option of changing the allocation in various funds.

Guaranteed Interest Credit (GIC)

Key Features:

Earn a guaranteed Interest rate - Interest rate is guaranteed across the different deposit tenures at a compounding rate for contributions to the Group Gratuity, Leave Encashment and Pooled Superannuation funds.

Choose your fund. Choose your future - The Unit-Linked platform offers the benefit of ten investment funds

Flexibility to choose your tenure: You have the convenience of choosing your guaranteed interest deposit tenure as 3, 5, 8 or 10 years.

Enjoy a mandatory life cover: The policy provides a mandatory flat/graded Life Insurance cover for all employees provided the sum assured is equal to future service gratuity contribution or a minimum of Rs 1000 per employee.

Know your returns upfront: The policy allows you to know your guaranteed returns before getting into the contract thus providing complete transparency.

Minimal surrender charges: Surrender charges are as low as 0.5 per cent in the 1st year, 0.25 per cent in the 2nd year and NIL thereafter.

Group Value Plus Plan (GVPP)

Key Features:

Multiple Plan Options
You have a choice of five plan options A, B, C, D and E that enable you to select suitable plan fulfilling your specific needs.

Manage Multiple or Single account for each scheme/member
You may specify the number of accounts you want to maintain. Your premium will be invested account wise and fund value will be tracked for each account separately. Your policy can be managed with multiple accounts as well as different fund allocation to suit each account. Additionally, you have the freedom to open new accounts at any time by paying fresh premium specified at the time of payment.

Flexible premium anytime
You have the convenience to pay the premium in one or more installments. Also, you may pay premium at any point of time

Customised investment portfolio as per changing needs
You have a choice of market cycle or self managed options to manage your investment portfolio.
In the Self Managed option, you have the freedom to decide how to invest your premiums. We offer eleven investment fund options to suit your specific needs. Under the MarketCycle Option, your portfolio will be structured as per your risk profile – you can decide whether you are Aggressive, Moderate, Conservative or Assure in your approach towards investments. Your portfolio will then be monitored and administered by us, saving you the time and effort involved in overseeing it yourself.
You can change the risk profile anytime that too free of charge. The rebalancing of the MarketCycle Option is also free of charge.
You also can switch from Self Managed Option to MarketCycle Option or vice versa at any time.

INVESTMENT FUND OPTIONS
The portfolio of the different Investment Fund Options is given below:

Investment Fund	Risk Profile	Asset Allocation	Min.	Max.

Group Money Market	Very Low	Debt Instruments, Money Market & Cash Equities & Equity Related Securities	100% 0%	100% 0%

Group Short Term Debt	Very Low	Debt Instruments, Money Market and Cash Equities & Equity Related Securities	100% 0%	100% 0%

Group Gilt	Low	Debt Instruments, Money Market and Cash Equities & Equity Related Securities	100% 0%	100% 0%

Group Fixed Interest	Low	Debt Instruments, Money Market and Cash Equities & Equity Related Securities	100% 0%	100% 0%

Group Income Advantage	Low	Debt Instruments, Money Market and Cash Equities & Equity Related Securities	100% 0%	100% 0%

Group Bond	Medium	Debt Instruments, Money Market and Cash Equities & Equity Related Securities	100% 0%	100% 0%

Group Secure	Medium	Debt Instruments, Money Market and Cash Equities & Equity Related Securities	80% 10%	90% 20%

Group Stable	High	Debt Instruments, Money Market and Cash Equities & Equity Related Securities	65% 20%	80% 35%

Group Growth	High	Debt Instruments, Money Market and Cash Equities & Equity Related Securities	50% 30%	70% 50%

Group Growth Advantage	High	Debt Instruments, Money Market and Cash Equities & Equity Related Securities	40% 30%	70% 60%

Group Growth Maximiser	High	Debt Instruments, Money Market and Cash Equities & Equity Related Securities	0% 80%	20% 100%

How Gratuity works

As per the Payment of Gratuity Act, 1972, an employer makes annual contributions based on salary, for each completed year of service of the employee towards gratuity. The lump sum accumulated is payable on death of the employee during his tenure of service or if the employee retires/resigns after completing at least 5 years of continuous service with the employer.

Gratuity is calculated as the last drawn salary (basic plus dearness) multiplied by 15, multiplied by the number of years in service, divided by 26. The number of years is rounded off for every 6 months i.e. if the employee has worked for 7 years and 5 months, only 7 years will be considered for gratuity.

Regulations

Eligibility Condition and Contribution

All companies employing 10 or more employees are liable to pay gratuity.

All employees that complete 5 years of continuous service are eligible for gratuity. The only exception is in case of the employee's death, after which the gratuity is paid to the nominee or heir.

The annual contribution of an employer should not exceed 8.33 per cent of the employee's salary.

There are four instances when an employee receives gratuity. These are:

	On resignation
	On retirement
	On early retirement due to ill heath
	On death

Benefits

For Employees

	The gratuity payable to an employee is 15 days wages (basic plus dearness allowance) for year that he/she completes or part of a year in excess of 6 months. This is subject to a maximum of Rs 3.5 lakh.
	Death benefits in the form of future service gratuity, which is paid for the anticipated salary based on the last drawn salary of the employee.

Tax Treatment

For Employers

	The annual contribution by the employer, subject to a maximum of 8.33 per cent of the annual wage bill of the employee, is a deductible business expense under section 36 (i) v of the Income Tax Act 1961.
	The income on investment is exempt from tax under section 10(25) (iv) of the Income Tax Act, 1961

For the Employee

The gratuity received by an employee, covered by the Payment of Gratuity Act 1972, is tax free subject to the least of the following amounts:

	15 days salary, based on salary last drawn for every completed year of service (or part thereof in excess of 6 months)
	Rs. 10 lakh
	Gratuity actually received

Death benefits received by the employee's nominee are tax free.