Investment School: 2009

Hidden savings of an employee

Writing a post after a loooong time.

Most of us often feel bad that we are not saving enough from our net take home salary. Yes, one should feel bad about it and need not be bogged down because of this for a simple reason - you can find opportunities to save always if you are little bit more disciplined.

But what is this hidden savings which i am talking about. Every employee in the organized sector saves 24% of the basic salary as Employee provident fund and EPF earns 8.5% annually. Following are the most likely hidden savings for an employee in organized sector.

1. Employee Provident Fund + Employee Pension Scheme = 24% of basic salary.
2. Super Annuation = 10-15% of basic salary ( varies between companies).
3. Gratuity = 4-5% of basic salary ( varies between companies)

All the above components can be redeemed when an employee quits an organization and moves to another one.

For a take home salary of 50k, one would save around 7-8k without knowingly and this is earning 8.5-9.5% interest which is not bad.

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How to calculate your super annuation balance in LIC?

I thought i could share some useful information on how to check your superannuation balance online in LIC if your employer maintains a super annuation fund in LIC. First let me give a brief description on Superannuation.

What is Superannuation?

Superannuation is a contribution made by your employer each year(usually it is 10-15% of your basic sal) on your behalf towards the group superannuation policy held by the employer.

Conditions of Superannuation account:

The amount that the employee gets is as under:

a) < 1 year of employment : NIL
b) >1 year but < 2 years : 50% of the contribution + interest earned
c) > 2 years but < 3 years : 75% of the contribution + interest earned
d) > 3 years : 100% of the contribution + interest earned

At the end of each financial year, LIC pays an interest on the contribution made by the employer in your account. The interest rate is around 9.25% and it is set by LIC annually.

Benefits of Superannuation:

Once the employee completes 3 years of service and works till his/her retirement, he/she can make use of superannuation balance as a form of pension. He/She can withdraw 1/3rd of the accumulated balance after retirement and the rest can be availed as monthly pension till end of life.

How to Check Superannuation balance online?

1. Go to

2. Register for a user id and password.

3. Login.

4. Click on 'Group Scheme Details' tab.

5. Click on 'member' radio button.

6. Get the group policy number for super annuation from your company's payroll department and enter '' in the policy number text box and click ok.

7. It will ask for LIC Id no and Date of Birth fields.

8. To get LIC Id no, call LIC branch with which your employer has a super annuation account and inform that you are calling from your company and provide your name to the LIC official. They will give your LIC ID No.

9. Since most companies had not furnished the date of birth details to LIC, enter '01/07/1960' / '07/01/1960' (forgot the order, try both n check) in the date of birth field.

10 .You will get the policy enrolled and you can click on the policy number to view the details. The details will contain the accumulated balance till the last financial year. It also shows contribution made by your employer i the current financial year.

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