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Submitted By surajrathore
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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 became mobile and new employment avenues opened. HR managers started developing newer employee benefits to attract and retain employees. A few of the employee benefits that are commonly offered in India are listed below:1
1. Retirement programmes a.
Employees’ Provident Fund – A statutory, hybrid, interest guarantee retirement plan administered and supervised by a government entity called the Employees’ Provident Fund
Organization (EPFO). The defined contribution portion of the plan allows for employee and employer contributions.
Employees contribute up to 12% of basic salary with an option of paying an additional 12% contribution. Employers also pay 12% of basic salary, out of which 8.33% is used to fund the pension portion of the provident fund, called the Employee Pension Scheme. The remaining 3.67% is deposited into the employee’s Provident Fund account.
Interest is credited at a rate that is announced by EPFO each year in consultation with the government. Employers pay an additional 1.61% to EPFO partly as an administration charge and partly to buy life insurance for the employees.
The general view of the

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