Insurers coming up with pvt pension schemes

KATHMANDU, FEB 25 -

Not only can government employees, even private sector employees now get pension. With an increasing number of life insurance companies starting pension schemes, private sector employees can benefit largely.

The only difference is private sector employees should contribute to insurance companies in the form of premiums, while government employees should not make any contribution to the government. However, the government is also considering a new pension model in which employees should make some contribution, as it is bearing a huge burden under the current model.

Metlife American Life Insurance Company (ALICO) started its pension scheme in August 2010 and a few other companies are also gearing up to start such scheme. Prime Life Insurance Company and Nepal Life Insurance Company (NLIC) are planning to start the scheme soon.

An ALICO official said under their pension scheme, an individual can get pension until the age of 100. If a policyholder dies after retirement, his/her beneficiary will get pension for 20 years. “In the event of the death of a policyholder prior to his retirement, his/her beneficiary can claim insurance,” said the official. “Any individual aged 18-55 years can participate in the scheme.” The premium amount depends on policyholder’s age and policy, said the official, adding that they are receiving a good response.

Insurance companies see a great market potential, as many private sector employees are deprived of social security benefits. Resta Jha, chief executive officer of Prime Life, said their motive behind introducing pension scheme is to expand the insurance market in urban areas and ensure social security to private sector employees.

Prime has already designed a pension policy. As per the Prime’s scheme,

policyholders will have to decide on how many years they want to pay premium and from when and for how many years they want pension. “They should pay premium at least for five years as per our scheme,” said Jha.

The pension period will be based on the wish of policyholders. “If they want pension for a long period, they get relatively low monthly payment,” said Jha.

NLIC is carrying out necessary homework to start the scheme. “It will take some time, as we have to adjust the scheme as per Nepal’s mortality table,” said Manoj Kumar Bhattarai, chief executive officer of NLIC. He also demanded tax benefits for such schemes.

Social security scheme of insurance companies has come at a time when the government is planning to introduce a comprehensive social security plan by imposing 1 percent tax on every employee—both government and private sector. Because of differences between trade unions and employers over labour flexibility issue, the plan is yet to make headway.

Posted on: 2011-02-25 08:55

PRITHVI MAN SHRESTHA, http://www.ekantipur.com/2011/02/25/business/insurers-coming-up-with-pvt-pension-schemes/330109.html