Superannuation scheme and Curate’s egg

A decade ago, my salary consisted of three retirement benefits- PF, Gratuity and Superannuation. The company had tied up with LIC for administration of superannuation scheme. Scheme worked like this- amount equal to 15% of base salary was deducted every month and send to LIC Superannuation fund. This was to on till the day I retire or I leave organisation. If I left organisation before age of retirement, then entire amount was transferred to LIC fund and I was eligible for “lifelong” pension.

In my 4 years tenure, I had accumulated some Rs. 1, 50,000. I was not interested in pension scheme as I was decades away from retirement. But LIC refused to return amount, so now they pay me pension @ 7% i.e Rs. 10500 per annum, it will take me roughly 14 years to recover the principal!

Scheme may be good for those who wish to stay in single organisation for lifetime, but most of the employees have average tenure of 3 years in telecom companies. For young employees this scheme makes no sense ex. someone joins at age of 21 and leaves at age of 24, he will not get his hard earned money, instead LIC will keep paying him interest at low rate of 7% till his death, while he could have easily used that money for some other purpose ex. medical expenses of his family.

HR department told me scheme had some good features like lifelong pension and on my death entire amount of 1, 50,000 will be transferred to my dependent.

This reminds me of curate’s egg- a curate who served bishop a stale egg, but argued that though egg is stale, parts of it are good!

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