Buy a Life Insurance Plan in a few clicks

Now you can buy life insurance plan online.

Kotak Guaranteed Fortune Builder

A plan that offers guaranteed income for your future goals. Know more

Kotak e-Term

Protect your family's financial future. Know more

Kotak Assured Savings Plan

A plan that offer guaranteed returns and financial protection for your family. Know more

Kotak Guaranteed Savings Plan

A plan that offers long term savings and life cover. Know more

Kotak e-Invest

Insurance and Investment in one plan. Know more

Kotak Lifetime Income Plan

Retirement years are the golden years of life. Know more


Get a Call

Enter your contact details below and we will get in touch with you at the earliest.

  • Select your Query

Thank you

Our representative will get in touch with you at the earliest.

What Are Superannuation Benefits?

A superannuation benefit is a type of retirement pension provided by a company to its employees. Click here to know all about superannuation benefit.

  • Jun 10, 2022

Retirement planning might sound like something that can wait at the start, but believe us, it is not. The earlier you start, the better. We all live in a fast-paced world and planning a retirement or for that matter an early retirement, should always be your priority.

Therefore, most companies offer a variety of retirement plans to their staff - either as a legal requirement or to keep employees for a prolonged period of time. These retirement benefits offered by an employer are known as superannuation benefits.

Employees tend to ignore these benefits as they are not aware about it. Are you also not aware of it? Keep reading while we help you understand what is superannuation and its benefits.

What is Superannuation?

A superannuation benefit is a type of retirement pension that is provided by a company to its employees. It is a scheme designed for the welfare of the organization’s workers in the form of a pension plan.

A superannuation plan by an organization is also known as the company pension plan. The funds deposited in the account will grow until the retirement or the withdrawal time without any tax implementations.

Therefore, you can say that a superannuation scheme is simply a retirement scheme. Now that you know what superannuation fund is, let’s move forward and understand the working, types and benefits in detail.

What are supperannuation benefits

Working of Superannuation Scheme

An employer contributes a small sum that is assured to the employees’ superannuation accounts. This sum is either managed by the company’s trust or by any insurance company approved by the PFRDA (Pension Fund Regulatory and Development Authority).

For the superannuation fund, a fixed percentage of the basic pay and dearness allowance of the employee is contributed by the employer. This amount is deducted from employee’s account. The employer can contribute a maximum of 15% of the basic pay for the superannuation fund. It is a personal call as you are not obligated to allocate your money to this program as an employee.

While the monthly sum is relatively small, it still builds up a capital large enough to assist you in meeting your expenses after retiring. Employers typically purchase group superannuation plans from insurance firms that manage both individual and group accounts. The interest and profits earned by the insurer via fund investments are placed in your personal account, and the interest rate is generally identical to provident fund rates.

In the event that you switch jobs, you have the option of transferring your superannuation fund to your future employer. If the new company does not provide a superannuation plan, you also have the option of withdrawing the fund or leaving it in the account until retirement, post which it can be taken out. Also, for the defined-contribution plans like NPS.

  • Employees can voluntarily increase the contribution amount to build a higher retirement corpus.
  • A retired person should invest 40 percent of their retirement corpus in an annuity plan that can help them provide a regular pension.

Classification of Superannuation Benefits

There are two types of superannuation benefits on the basis of gains and investments that are listed below:

1.Defined Benefits Plan

It implies that the benefit earned by this sort of superannuation fund is already defined irrespective of how much money is put into the scheme. The pre-calculated benefit is decided by several factors such as - the total number of years you have served for the firm, your income, the age at which you will start reaping the benefits, etc.

It is a somewhat tricky situation, and the employer bears the risk of providing compensation. In case you are eligible to receive this fund, it is a predetermined sum that you receive at periodic intervals after retirement. This sum amount is calculated by a pre-existing formula.

Defined Contribution Plans

This plan is the polar opposite of a defined benefit plan. A defined contribution plan has a fixed contribution, and the benefit is proportional to it and the market forces. This type of superannuation benefit is simpler to manage, and you as the employee assume the risk since you are unaware of the amount you will get post-retirement.

Benefits of Superannuation in Income Tax

Employers and employees both profit from the superannuation scheme with respect to tax savings as per the Income Tax Act of 1961. To be eligible for these superannuation benefits, the organization’s superannuation pension scheme has to be authorized by the Commissioner of Income Tax.

The benefits of income tax are as follows

Benefits for an employer

The employer’s contribution to getting the superannuation fund approved is deducted as a business expense. Any income that is a part of self-managed trusts of an approved superannuation fund is exempted from taxation. The contribution of more than ₹1,00,000 by the employer in respect of any employee is taxable as perquisites.

Benefits for an employee

  • If an employee voluntarily approves the superannuation fund, it is deducted under Section 80C. Theoverall limit of deduction for an employee is ₹1,50,000 under Section 80C.
  • The superannuation payment made to an employee after specified age is exempted from taxation.
  • The benefit received from the superannuation fund on the death or injury of an employee is tax-free.
  • Also, in case the employee becomes incapable of working due to any reason before their retirement, superannuation will be tax-free.
  • Tax exemption can also be availed by transferring the employee’s account under a pension scheme as in Section 80CCD that the Central Government notifies.

Superannuation is a fantastic approach to ensure a financially comfortable retirement. Employer contributes a fixed fund on the basis of employees’ salary, age and several other factors. After retirement, employees can withdraw the amount and reap its benefits. Therefore, it is critical to invest early in a superannuation scheme and use the superannuation fund to be at peace throughout the golden years of life to live the retired life you have always wished for.

Kotak Life Time Income Plan

Download Brochure


  • 6 Plan Options
  • Tax benefits ^
  • Higher annuity rates for higher purchase price
  • 4 Annuity Modes

Ref. No. KLI/23-24/E-BB/1052


- A Consumer Education Initiative series by Kotak Life

Similar Articles

What are the Instruments Available for Building a Retirement Corpus?

Types of Pension Plans and Their Tax Benefits

Top Investment Options for Retirement Planning

Tips to invest your voluntary retirement scheme money

ELSS vs ULIP: Which is a Better Investment?

Right Age for Retirement Planning and How to Go About It

How Does ULIP Work in India?

Mistakes You Must Avoid While Planning Retirement

Mastering the 30:30:30:10 Rule: A Guide to Effective Retirement Planning

Benefits of Annuity Plan Investment

Understanding Annuity Plans

Early Retirement Planning Tips

What are the 4 Financial Phases of Retirement? How to Budget For Each One?

What is a Defined Benefit Plan and How it Works?

Turbocharge Your Retirement Savings with Annuities: Unlock Greater Returns

The Significance of Number 8,000 in Retirement Planning

Do Pension Plans Allow Any Death Benefits?

Gift Your Parents a Sound Retirement Plan

Steps to Figure Out How Much Money You Will Need After You Retire

Embracing the FIRE Movement: Financial Independence and Early Retirement

Getting Close to Retirement? Six Key Retirement Planning Tips That Can Help You Retire

How to Maximize Your Retirement Savings with a Pension Scheme in India

How Can NPS Help You Save Tax?

Benefits of Early Retirement Planning

7 Best Guaranteed Income Plans 2023 in India Their Eligibility, Features & Benefits

Retirement: A New Start to Life!

Importance of financial Planning for Retirement

Retirement Planning at 50? You Are Still Good to Go

ULIPs or Pension Plans – Which is a Better Retirement Plan?

10 Steps to Figure Out How Much Money You Will Need For Your Post Retirement Plans

What Are Mortality Charges In ULIP?

Ten Signs That You're Ready to Retire

Types of Retirement Plans

Know the Pros and Cons of Retirement Annuities

Retiring soon? Here’s why buying annuity plans may make sense

How should one decide on fund allocation within NPS?

Which Pension Plan Suits You best?

Demystifying Retirement Financial Planning

Is an Annuity a Good Investment Option?

Here's Retirement Planning Guide for Working Men & Women

How To Choose The Right Pension Plan?

What Is A 401(k) Retirement Plan?: A Beginner's Guide

Retirement Planning Guide: These 5 Steps Will Help You Towards a Safe, Secure and Fun Retirement

What are the Rules for Exit From NPS?

7 Secrets that can Make Your Post-Retirement Phase Prosperous

Meaning of Sum Assured in a ULIP

Retirement and Pension Plans in India- What are Your Options?

How to Save for Retirement With Retirement Investment Plans?

Types of Annuity Plan | Annuity Definition - Meaning & Key Benefits

5 Best Investment Options for Senior Citizens in India

Different Types of Retirement Schemes

Which are the Best Investment Plans for Indian Senior Citizens in 2022?

A Quick Guide to Retirement Plans

How To Calculate The Present Value And Future Value Of Annuities?

3 Ways to Save Early to Keep Living Out Your Dreams Post Retirement

Retirement Planning: Use our Retirement Calculator to Plan Ahead

Top 3 Reasons Why You Should Start Retirement Planning Early

How to Win at Retirement Savings?

Long-Term Investing: Boost Retirement Income with an Income Booster

Benefits of Early Retirement Planning in India

Here's are Advantages of Pension Schemes and Retirement Plans

How to Calculate Your Retirement Corpus?

Reasons you should Buy a Retirement & Pension Plan

Annuity Plan | How to Choose the Right Annuity Plan | Kotak Life

Why Should Retirement Planning Be on Top of Your Priority List?

What is an Annuity Plan, and How Does an Annuity Plan Work?

How Much Corpus Does One Need for Retirement?

What are the Differences Between ELSS ULIP and Mutual Funds?

What tax benefits are there on saving for retirement?

Here's Benefits of Post Retirement Investment Options

How to Protect Your Retirement Account from Hackers

How Has NPS Performed in Comparison with Other Instruments?

Which Is Better: ULIP or SIP?

Pension Funds In India – Meaning, Overview, How Do Pension Funds Work, Types, Pension Plan Features and Tax Benefits

6 Signs That You Are Not Financially Ready For An Early Retirement

Why is it Good to Have a Retirement Plan Before Your Marriage?

Turbocharge Your Retirement Savings with Annuities: Unlock Greater Returns

What Are Retirement Pension Plans?

Important Questions To Ask Yourself Before Choosing A Good Retirement Plan

14 Tips to Ensure Successful Retirement Planning

Is ULIP Better Than FD?

What are the Benefits of ULIP - Explained

How To Check EPF Claim Status- The Complete Process

Plan Your Retirement in India - Retirement Calculator

Retirement planning with a systematic life insurance plan

How Does NPS Work?

What is the Minimum Lock-in Period for ULIP?

The Rise of ESG Investing in Retirement Planning

What are the Charges Levied on ULIP?

Retirement Planning for Millennials

Is it possible to live a financially independent life, even after you retire?

4 Tips to Avoid Running Out of Money in Retirement

NPS for Housewife

Importance of Retirement Planning

What Retirement Would Look Like 30 Years From Now

Guide to Long Term Investment

Managing Your Money After You Retire

How to Register An EPF Grievance Online

Changing Jobs? Reinvest Your Retirement Funds

Terminologies You Should Understand About Retirement Plans

15 Passive Income Ideas for Seniors to Boost Retirement Income

Inflation: A Key Factor to Consider into Retirement Planning

How Do Annuity Options Work In NPS

6 investment options for the retired

Types of Pension Plans for Your Retirement

What is the Difference Between EPF, VPF, and PPF? What are Their Tax Benefits?

What is a Retirement Plan - What are its Features?