Thursday, 30 September 2010

IRDA makes ULIPs more attractive to investors

ULIP is a monetary product which can provide you life insurance and also at the same time investments options like a mutual fund. Some of the amount paid as premium would be accounted for the amount promised under insurance policy and the rest would be put in whichever investment is preferred by you. It could be equity or fixed return or a mixture of both.

Recently IRDA (Insurance Regulation and Development Authority) made certain changes to make ULIPs (Unit Linked Insurance Plan) more attractive and beneficial to investors. These changes made the ULIP schemes more popular.  Let us go through the changes and its benefits.

Extended Lock in Period

Earlier the lock in period of ULIP plans is three years. It has been extended to 5 years. Now an investor can withdraw the money from ULIP only after 5 years. By doing so the IRDA ensures the commitment of investor to stay a long time and only those who wish to stay in ULIP for such a long time can enter in the scheme and long period bring them more benefit than short period.

Controlled the expenses charged by the Scheme

The IRDA instructed that the expenses of the scheme must be minimized to 3%. This is the difference between the gross yield and net yield of the scheme. Gross yield is the actual income derived by the scheme and net yield is the balance of income after deducting all expenses such as agents commission, operating expenses etc. Here IRDA controlled the expenses to 3%, that is, the agents commission and all other expenses should not be more than 3% for the products with a tenure is less than 10 years and 2.5 %  for the products more than 10 years. All unwanted expenses and high agent commission are being controlled by these changes.

High Surrender Value

Through this change the insurance company can charge only the client acquisition cost from those who wish to surrender the scheme before the maturity. They cannot charge high surrender charge. So the investor will get a high surrender value than earlier.

Minimum 4.5% guaranteed return of pension fund

This will compel the insurance companies to take minimum risk while handling pension funds. They have to pay a minimum of 4.5% return to ULIP holders. This is beneficial to senior citizens and their money is saved from risky market fluctuations and they can ensure a careful handling of fund.

Can pledge to bank as collateral security to take loan

Now the ULIP holder can pledge his certificate to bank for taking a loan against it. They can avail a loan up to 40% of the NAV (Net Asset Value) of the product. This will save them to surrender the ULIP up to a certain extent.

There should be a minimum insurance cover

It has been made mandatory for all ULIP s to provide at least mortality cover or health cover except for pension and annuity products

With the above mentioned guidelines the IRDA makes ULIPs more investor friendly and hope that this will make happy the investors and will get more from the scheme.

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Wednesday, 29 September 2010

Railway gives special education allowance and hostel allowance for disabled children

As per the Para 2 of the OM No. 12011/04/2008 ESTT (Allowance) issued by the Department of Personnel and Training, the reimbursement of Education allowance for the Disabled children of railway employees get double the normal rate of such allowance. According to this order they will get Rs. 24000/- per year as education allowance. Normal allowance is Rs. 1000 per month (Rs. 12000 per year) for the tuition fee and the cost of uniform, books and other study materials.

In addition to the above benefit giving double benefit of hostel Subsidy also under consideration. If approved they will get Rs. 6000/- per month as hostel subsidy shall be payable to the disabled children of railway employees as per the conditions mentioned in DOPT&OM No. 12011/03/2008-Estt. (Allowance). Normal subsidy is Rs. 3000 per month.

No doubt railway is considering its employees and the world’s largest employer

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Tuesday, 28 September 2010

Infrastructure Bond for Additional Rs. 20000 exemption under section 80CCF

Financial year 2010-11 you can get additional tax exemption for Rs. 20000 under section 80CCF. Let us examine the conditions and benefit of such infrastructure bonds.

Minimum and maximum Time limit of investment

The maximum time period of infrastructure bond under section 80CCF is 10 years and the minimum lock in period is 5 years. Only after 5 years you can redeem such bonds.

Rate of interest

The rate of interest of infrastructure bond under section 80CCF is varying from 7.5% to 8% per year. You can opt for yearly payment of interest or cumulative payment at the redemption of bond. TDS (Tax Deducted at Source) will not be deducted at the time of payment of interest. But the interest is taxable.

Maximum and Minimum amount of investment

A investor should invest minimum Rs. 5000 in such bond (According to the terms of the issuing institution) and no maximum limit on such investments. Even though under section 80 CCF the investor get exemption for only Rs. 20000 for a particular financial year.

Mode of holding

The holding allows only through a demat account. This is the main disadvantages of such infrastructure bond. The investor should open a demat account to hold such bond.

The infrastructure bond is proposed to be listed in stock exchanges.

Collateral security

You can pledge the instrument in banks as collateral security for taking loan. But this is allowed only after the minimum lock in period of 5 years.

Issuing Authorities

LIC, IFCI, IDFC or any other notified NBFC can issue infrastructure bonds under section 80 CCF

Recently issued Infrastructure bond under section 80 CCF

IDFC has issued an infrastructure bond and it will be available in the market from 30th September, 2010 to 18th October, 2010. It has been listed in Bombay Stock Exchange. Face value of one bond is Rs. 5000 and a investor must take at least two bonds. All the above mentioned conditions are applicable for this bond.

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The Second Meeting of MACP Committee

The report of the discussions on various issues related with MACPS for Government Employees by the Second meeting of MACP Committee. The Meeting was held on 15th September, 2010.

1.      Item No. 1, 9 and  29,46: The demand was to provide for Grade Pay of the next promotional post under MACP as was given in the old ACP Scheme.  This has not been agreed to.

2.      Item No.3. Option for each individual employee either to retain the old ACP scheme or to switch over to MACP.  It was only agreed by the DOPT that they may consider giving option to the Department and not to the individual employee to retrain old ACP Scheme in respect of either the entire establishment of that Department or for a specific category or cadre of the employees of that Department. They also added that they may instruct the Administrative department to undertake restructuring of the cadres in consultation with the Staff Side which would secure quicker promotion.

3.      Item No. 8. Anomaly in respect of Junior Engineers of CPWD. The Official side agreed that CPWD may ask for option to retain the old ACP in respect of Junior Engineers which will be considered.

4.      Item No. 2, 10 and 48.  The Scheme of MACP to be implemented with effect from 1.1.2006.  Not agreed to.

5.      Item No. 7.Grant of financial up-gradation under ACP between 1.1.2006 to 31.8.2008 in respect of employees who have opted the revised Pay Band Grade Pay System with effect from 1.1.2006. Agreed to.

6.      Item No. 4 and 26. Applicability of MACP scheme to Group D employees placed in the grade pay of Rs. 1800 in PB1. along with the benefit of 3% increment in each stage of up-gradation.  Covered by the clarification already issued by the Department of personnel ( See their website)

7.      Item No. 5 and 23.  Counting of 50% of service rendered by a casual labourer with temporary status for reckoning the 10, 20 and 30 years of service for the purpose of MACP.  They will examine the court ruling in this regard according which the entire casual service should count for the purpose of MACP.

8.      Item No. 6. Supervised staff placed in higher grade pay than their supervisor.  The item has been transferred to the National Anomaly Committee for discussion.

9.      Item No.11 and 47. In the Railways and some other departments, promotion continues to be given in the merged pay scales, since these have not been functionally merged. It was demanded that in such promotion increment at the rate of 3% may be granted.  The Official side has agreed to consider such cases, if taken up by the respective departments.

10.  Item No. 15, 22, 39 and 51.These would be considered in the Anomaly Committee of Railways.

11.  Item No. 12, 30 and 49. Those selected under LDCE/GBCE schemes may be treated as directly recruited personnel as was done in the case of old ACP scheme.  The Official side agreed to look into it.

12.  Item Nos. 13, 16. 24 , 50 and 58.  It was pointed out that under old ACP scheme in case of an employee who were reverted from higher post to lower post at this request ( to enable him to get transfer to another recruiting unit) the service rendered by him in the higher post was counted for the benefit of ACP.  This should be extended to the MACP as well. The Official side agreed to issue necessary clarification in this regard.

13.  Item No.14.  A departmental employee who has been appointed to a higher grade by virtue of his being selected in a Direct Recruitment Examination the ten, twenty and thirty years of service for the purpose of MACP to be reckoned from the date of such appointment.  Necessary clarificatory order has been issued by the DOPT. ( Please see their website)

14.  Item No. 16. The service rendered by an employee who had resigned may be counted if he is given re-employment for the purpose of MACP. The Official side wanted this item to be processed separately.

15.  Item No. 17. The service rendered prior to removal or dismissal should count if he is reinstated on appeal or by Courts.  The Official side stated that the past service will be considered if so ordered by the Court or the Appellate Authorities.

16.  Item No. 36. The service rendered in a State Government/Statutory body /PSU before appointment in the Central Govt. to be counted for MACP. Not agreed to.

17.  Item No. 37 and 38. Counting the probation period for the purpose of MACP. This is counted as per the scheme

18.  Item No. 42. Application of MACP to a surplus hand redeployed to lower post. This is covered under the scheme.

19.  Item No. 18 and 54. A person de-categorised on medical grounds to be treated as a fresh appointee. It was not agreed to .

20.  Item No. 41. The service rendered in higher grade who have been redeployed in the lower post on medical de-categorised on medical grounds may be counted under the MACP. The official side agreed to reiterate Railway Board's order issued in the year 2005.

21.  Item No. 19, 33 and 53. Stepping up benefit to seniors when the juniors get higher pay on account of financial up-gradation.  The Supreme Court has given such an order. The Official side will examine this issue and the copy of the Supreme Court's order may be furnished to them.

22.  Item No.20. The Account Assistants in the Railways when appointed on qualifying the Appendix II Examination may be treated as a fresh appointee and his past service in the lower post be ignored. The Railway Board to process this case separately.

23.  Item No. 21.27 and 28.  The Bench mark of good for entitlement to MACP benefit in cases where promotion to the higher posts is on the basis of seniority cum fitness may be done away with. Agreed to examine and issue necessary clarification.

24.  Item No. 24, 40 and 45.  Counting of Training period. The induction training period would be counted.

25.  Item No. 25.  The incentive may be given as applicable to the grade pay granted under MACP. This may be considered by the Railways.

26.  Item No.31. Extension of MACP to Staff Car Drivers and other Drivers etc. The orders have been issued separately.

27.  Item No.34. Pay fixation on promotion subsequent to the grant of MACP with an increment. This was not accepted.

28.  Item No. 35. Notional classification for Central Government employees Insurance scheme for those with Grade Pay of Rs. 4200 to be treated as Group B and covered by the scheme for Group B. Not accepted.

29.  Item No.43. There are several illustrations given relating to Railway employees. These were not discussed and each case was asked to be processed separately.

30.  Item No. 55. There are no provisions for grant of certain privileges/incentive on grant of MACP as was there in the old ACP scheme.  The Item may be considered by the Railway administration.

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Tuesday, 21 September 2010

Union Labour Ministry is not ready to invest 15% of P.F Fund in Stock Market

Union Labour Minister Mallikarjuna Kharge told that his Minisrty is not ready to invest 15 percent of the funds in Provident Fund account in stock market. Now Employees Provident Fund (EPFO) is invested only five percent of the fund in stock market under the strict advice of financial consultants hired by EPFO. It is coming around Rs. 3,00,000 crore.

Mr Kharge, who is the Chairman of the Central Board of Trustees of the EPFO desired to invest only in safe recognized institutions like RBI, SBI, public sector units and other governmental organizations, which give guarantee of certain percentage of returns. They have given much importance of the P.F Fund. In his words they are not ready to take risk when it comes to the funds saved for years by the employees. PF is their lifetime savings and the only guarantees that will help them lead a comfortable retired life.

''Finance Ministry has asked us to increase the funds placed in open market to 15 per cent. But this will not happen. If the government gives us guarantee for our original capital and the returns in terms of interest or dividend, then we can see. But we cannot play into the hands of the open market'' he stressed.

Recently the interest rate is also increased from 8.5% to 9.5% in the financial year 2010-11. This move will benefit 4.70 crore organized sector workers.

Source: UNI India

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Sunday, 19 September 2010

How To Find New Investment Ideas Yourself

When you are looking for a good investment method looking around and search for new investment ideas. Sometimes the old and traditional investment methods may not help you much. Always look for new investment ideas and methods to make grow your hard earned money.  Let us discuss some sources to get new and fruitful investment ideas.

Your own family members and friends

This is one of the best methods of finding new investment ideas. Your family members and your intimate friends are your well-wishers and they may help you to give useful and good investment ideas. Either they may do such investments and reap a good harvest from that or they may have reliable ideas about such investment avenues. If you ask anybody else they may guide you to get their own benefit. But your family and friends will not guide you to get their own benefit. So trust them and ask for such ideas.

Financial Guides and publications

There are so many financial publications and guides tell you how to invest your hard-earned money. Choose trusted one and follow their studies, teachings and methods after evaluating it yourself. Standard & Poor’s financial guide is one of the best of such publications. They can tell you about different resources and latest investment opportunities. This is one of the trusted companies. Their ratings also can be trusted and follow.

Information from other companies

If you invest regularly you have to purchase several investment products. For purchasing such investment products you have to lookout for new products and new investment ideas. The companies provide information about their product. Go through such information and study it well. This information is helpful to know deeply about the products. But do not believe them whole heartedly. Study them and analyze it with different ratings.

Subscribe a copy of Wall Street Journal

The Wall Street Journal is one of the most important financial publications in the world today. It will publish useful information about almost all new investment products. Subscribe one copy and find information about the product attract you and make some research about it before investing in that instrument. IF you are a subscriber you will get a paper copy of the details and research of all new financial products. The Wall Street Journal provides an overview and you need to do more research before you invest.

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Saturday, 18 September 2010

Six Topmost Investment Ideas For Common Man or Woman

You may be wonder when you see the investmetn opportunites around you. So many advertisements and informations. But jsut go through this article and learn how can an ordinary person make money with investments.

Investment in Real estate
One can invest their hard earned money in real estate and the main form of income is the income derived from rent of the property if the real estate is let out or the difference in purchase price and sale price if it is for resale.  The main thing you have to consider that the location of the property and the Title of the property. If the property is in good location, no doubt you can earn a good rent or good capital gain. For the clear title of the property you seek the service of a good advocate or take loan from nationalized banks or any reputed financing institution. They will check the title of the property and only if it is legal they will grant loan to you. Read More

Investment in Gold
Gold is a precious metal and its value shows only an elevating trend. So there is no chance of loss, if you invest in gold. See more details

Invest in Stock Market
This is one of the best method of investment and when you try for it get some experience otherwise seek the advice of a good stock broker. Learn How

Invest in Forex trading
Trading in money market is also get a good amount of money. Most of the forex agencies gives you good training and make you able to make money from forex. Read More

Invest in Mutual Funds
If you don’t have enough experience in stock  market, mutual funds are the best option to make money from stock market. Read more

Invest in Short term deposits
Short term deposits are good and safest method of investment. When you invest in short term, at the maturity you will get the money with interest. You can deposit in long term fixed deposits also according to your financial needs and can earn more interest. Financail Planning

All above methods are good and learn that never invest all your money in one method. If it fails all your money will go. So diversify your investmetns and diversify the risk factor also. Wish you a good invesment future.

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Thursday, 16 September 2010

Union Cabinet Declared 10% D.A Hike From July 2010

Much awaited D.A declaration has been done today. The Union Cabinet (Thursday - 16th September, 2010) approved 10% hike in Dearness allowance (D.A) for Central Government Employees and pensioners considering the high inflation in the past six months.

At present the D.A is 35% with effect from 01st January 2010. Now the D.A will be 45% of the basic pay. The benefit of this declaration is for around 50 lakh employees and 38 lakh pensioners and they get a relief from the soaring prices due to high inflation rate.

This D.A increase will cost approximately Rs. 9303 crore per annum.

Dearness Allowance increases twice in every year in January and July according to the price index to compensate the inflation. This D.A declaration is important because as per sixth central pay commission, when the D.A overcome 50 % some daily allowances will increase 25% percent. Those allowances are Children Education Allowance, Child Care Allowance, Washing Allowance, Cycle Allowance, Cash Handling Allowance, Conveyance Allowance, and Split Duty Allowance. Some advances like Flood Advance, Festival Advance also will be increased by 25% when D.A exceeds 50%. And the next D.A declaration may overcome this limit as per the present trend.

No doubt this festival season came with a bonanza to central government employees.

Related posts

Expected D.A hike from July 2010

Why D.A (Dearness Allowance) is more awaited than Increment

Allowances Admissible to Central Government Employees.

Wednesday, 15 September 2010

Proposal for 10% D.A hike for Central Government Employees from July 2010

The cabinet today is likely to take up a proposal for 10% increase of D.A for central government employees and pensioners from 01st July 2010 onwards. This is in consideration with the high inflation for the past six months. At present the government employees getting 35% of their basic. If approved this will be 45% from July 2010 onwards.

In this festival season it is good news for the central government employees. The benefit of this proposal is for around 50 lakh government employees and around 38 lakh pensioners. This is according to the formula devised by the sixth central pay commission to compensate for the price rise.

See our earlier related posts

Expected D.A hike from July 2010
Why D.A (Dearness Allowance) is more awaited than increment

Handle your credit card with care and get benefited

Credit card is very much useful and it gives us freedom from the risk of handling liquid cash and also gives us some time to make the actual payment. But at the same time it is dangerous also. I f you are careless it will help you to vanish your wallet in no time.  If you use credit card keep control over the purchase and payments. Purchase only the needy items and when you purchase behave just like you are purchasing with the money you have.

Economist states that human wants are unlimited. But resources to satisfy these unlimited wants are limited. So a wise man/woman managed to handle our unlimited needs with limited resources. But somebody think that they got an unlimited source of money to pay through their credit card. The risk is hiding here. You can purchase as much as and when you need to pay the credit card bill they are offering a magical temptation is that the minimum amount to pay vey less amount than the actual payment.

Suppose your credit card bill is $ 10000 and the minimum amount to pay is only around $1000. You are tempted to pay $1000 instead of $ 10000.  Then you should pay the interest around 3% per month for the entire amount from the date of purchase, not from the last date of payment. You might have aware that this 3% pm is 36% per year. If you purchased for $ 1000 at the first day of your billing cycle starts and after 50 days the last date of payment you paid only the minimum payment of $ 100 and thought that the balance of $ 9000 could pay with interest @ 3% in the next due date.  No doubt you fell in the trap of credit card. With the next bill you have to pay 3% interest for the whole 100 days from the date of purchase. That means (9000 x 36% x 100)/365 = $ 888 as interest and there may be a fine also. So the next bill will be $9888 + fine if any. The minimum amount you paid is already gone. So keep in mind that pay full before the due date.

You should not be surprised if a nonpayment of $ 500 charges with another $ 400. That is the calculation of credit card. You may be wonder why these card authorities allow us such a credit facilities and good services. This is the secret.

But at the same time you can use credit card as a profitable tool. Some credit cards allow you life time free of service charge and money back for certain transactions. Some allows reward points for your transactions and the accumulated reward points can be redeemed for certain purchases. Make benefit out of it and at the same time mind to pay full in time.

One important thing you must keep in mind that the cash withdrawals with credit cards from ATM. This withdrawals charge a service fee and the interest will be charged from the very first day of withdrawal and sometimes they charge a high interest for such withdrawals.

Most credit cards offer an EMI facility to pay any loan you take on your credit limit. It normally takes just one or two business days to obtain this loan and this can even be arranged over the phone with no documentation. However, the difference lies in the high interest rate charged, which can be as high as 30-42% as an annualized rate. The cards that offer a comparatively lower interest rate in the range of 22-26% most often do not have an EMI facility for repayments.

Totally when you handle the credit card you handle it with care. Credit card is ok and a good instrument to fund your short term requirements and can get things before you get your normal income such as salary, rent etc. But remember the bank has the authority to change the interest rate and shorten or withdraw the interest free period at any time. So be vigilant for such changes. Use your credit card wisely and harvest benefit from it.

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Monday, 13 September 2010

Teachers of Jharkhand get Pay scales of 6th Central Pay Commission

On 11.09.2010, Government of Jharkhand announced the implementation of 6th Central Pay commission to teachers of universities in Jharkhand.

The decision of implementing 6th central pay commission to teachers was taken at a cabinet meeting chaired by the Chief Minister Arjun Munda and the implementation would be with the retrospective effect of April, 2010. Around 3000 teachers will get the benefit of this declaration. It would spend around Rs. 90 crore more and Jahrkhand is amoung a every few states which gives the benefit of 6th Central Pay Commission to its teachers.

Source : PTI

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Saturday, 11 September 2010

MACPS - Clarifications

Further Clarifications have been sought by various Ministries / Departments about certain issues in connection with implementation of the MACPS. The doubts raised by various quarters have been duly examined and point-wise clarifications have accordingly been indicated in the Annexure.

Reference:- Office Memorandum No.35034/3/2008-Estt.(D) dated 07.09.2010

1. Whether the Pay Band would change in the hierarchy of Pay Bands & Grade Pay on grant of the benefits under MACPS?

Yes. The upgradations under MACPS is to be granted in the immediate next higher grade pay in the hierarchy of recommended revised pay (band and grade pay as prescribed in the CCS, (RP) Rules, 2008.

2. Whether the benefits of MACPS would be allowed to the Government servants who have been later on inducted in the Organized Group “A” Service

No. The benefits under MACPS is not applicable to Group ‘A’ officer of Organised Group ‘A’ Services, as the officer under Organized Group ‘A’ Services have already been allowed panty of two years on non-functional basis with the officers of Indian Administrative Service (IAS)

3. How will the benefits of ACP be granted if due between 01.01.2006 and 31.08.2008?

The new MACPS has come into existence w.e.f. 01.09.2008. However, the pay structure has been changed w.e.f. 01.01.2006. Therefore the previous ACPS would be applicable in the new pay structure adopted w e f . 01.01.2006. Para 6.1 of Annexure-1 of MACPS is only for exercising option for coming over to the revised pay structure and not for grant of benefits under MACPS. The following illustrations would explain the position:

(A) In the case of isolated post:

Date of appointment in entry Grade in the pre-revised pay scale of Rs.4000-6000: 01.10.1982

1st ACP granted on 09.08.1999 :
Rs.4500-7000 (pre-revised)

2nd ACP due on 01 10 2006 :
Rs.5000-8000 (pre-revised)
[revised PB-2 Grade Pay of Rs.4200]

3rd financial upgradation under the MACPS would be due on 01.10 2012 (on completion of 30 years of continuous regular service) in the immediate next higher grade pay in the hierarchy of recommended revised pay band and grade pay i.e. Grade Pay of Rs.4600 in PB-2.

(B) In the case of normal promotional hierarchy:

Date of appointment in entry Grade in the pre-revised pay scale of Rs.5500-9000: 01.10.1982

1st ACP granted on 09.08.1999 :
Rs.6500-10500 (pre-revised)

2nd ACP due on 01.10.2006 (as per the existing hierarchy) :
Rs.10000-15200 (pre-revised).

Therefore, 2nd ACP would be in PB-3 with Grade Pay of Rs.6600 (in terms of hierarchy available):

3rd financial upgradation under MACPS would be due on 01.10.2012 in the immediate next higher grade pay in the hierarchy of recommended revised pay band and grade pay of Rs.7600.

4. Whether the benefits of MACPS would be granted from the date of entry grade or from the date of the regular service/approved service counted under various service rules

The benefits under MACPS would be available from the date of actual joining of the post in the entry grade.

5. In a case where a person is appointed to an ex-cadre post in higher scale on deputation followed by absorption. whether the period spent on deputation perlod would be counted as continuous service in the grade or not for the purpose of MACPS

(i) Where a person is appointed on direct recruitment/deputation basis from another post in the same grade, then past regular service as well as past promotions/ACP, in the earlier post, will be counted for computing regular service for the purpose of MACPS in the new hierarchy.

(ii) However, where a person iS appointed to an ex-cadre post in higher scale initially on deputation followed by absorption, while the service rendered in the earlier post, which was in a lower scale cannot be counted, there is no objection to the period spent initially on deputation in the ex-cadre post prior to absorption being counted towards regular service for the purposes of grant of financial upgradation under MACPS, as it is in the same Pay band/grade pay of the post.

6. Whether the pay scale/grade pay of substantive post would be taken into account for appointment/selection to a higher post on deputation basis or the pay scale/grade pay carrying by a Government servant on account financial up gradation(s) under ACP/MACP Scheme

The pay scale/grade pay of substantive post would only be taken into account for deciding the eligibility for appointment/selection to a higher post on deputation basis.

7. In a case where 1st/2nd~ financial upgradations are postponed on account of the employees not found fit or due to departmental proceedings, etc. whether this would have consequential effect on the 2nd/3rd financial upgradation or not.

Yes. If a financial upgradation has been deferred/postponed on account of the employee not found fit or due to departmental proceedings, etc.. the 2nd/3rd financial upgradations under MACPS would have consequential effect. (Para 18 of Annexure-1 of MACPS referred).

8. In a case where the Government servant have already earned three promotions and still stagnated in one grade for more than 10 years, whether he would be entitle for any further upgradation under MACPS

No. Since the Government servant has already earned three promotions, he would not be entitled for any further financial upgradation under MACPS.

9. Whether the pre-revised pay scale of Rs.2750-4400 in respect of Group ‘D’ non matriculate employees, would also be taken as merged to grade pay of Rs.1800 for the purpose of MACPS in view of merger of pre-revised pay scales of Rs.2550-3200, Rs.2610-3540, Rs.2610-4000 and Rs.2650-4000, which have been upgraded and replaced by the revised pay structure of grade pay of Rs.1800 in the pay band PB-1.


10. If a Govt Servant on deputation earns upgradation under MACPS in the parent cadre, whether he would be entitled for deputation (duty) allowance on the pay and emoluments granted under the MACPS or not?

No. While eligibility of an employee for appointment against ex-cadre posts in terms of the provisions of the RRs of the ex-cadre post will continue to be determined with reference to the post/pay scale of the post held in the parent cadre on regular basis (and not with reference to the higher scale granted under ACPS/MACPS). Such an officer, in the event of his selection, may be allowed to opt to draw the pay in the higher scale under ACP/MACP Scheme without deputation allowance during the period of deputation, if it is more beneficial than the normal entitlements under the existing general order regulating pay on appointment on deputation basis.

11. Since the pay scales of Group “D” employees have been merged and placed in the Grade Pay of Rs.1800, whether they are entitled for grant of increment @ 3% during pay fixation at every stage.

Yes. On the analogy of point 22 of Annexure-1 of MACPS, the pay of such Group “D” employees who have been placed in the Grade Pay of Rs.1800 w.e.f. 01.01.2006 shall be fixed successively in the next three immediate higher grade pays in the hierarchy of revised pay bands and grade pays allowing the benefit of 3% pay fixation at every stage.

Read more

MACPS or Modified Assured Career Progression Scheme

MACPS or Modified Assured Career Progression Scheme

After the implementation of 6th Central Pay Commission earlier ACP has been replaced by MACPS (Modified Assured Career Progression Scheme) with effect from 01.09.2008. The Old ACP would be granted only up to 31.08.2008. According to MACPS an employee would get and enhancement of grade pay as well as pay band scale related with the new grade pay after a maximum of 10 years or service in a particular grade pay.

A Screening Committee would be constituted and the meeting would be held twice in a financial year most probably on January and July.

Under MACPS the financial up gradation is purely personal and it does not mean that if the junior got more pay than the senior after MACPS and the senior’s pay should be made par with the juniors pay.

This MACP is applicable for all cadres including Group A (excluding organized Grade A services)

MACPS is allowed up to the highest grade pay of 12,000 in PB-4. The pay shall be increased by 3% of the total pay (Basic pay + Grade pay) before MACP and it would be added with the difference in grade pay. There shall be no further fixation at the time of regular promotion if it is the same grade pay as granted under MACPS. Financial up gradation will be in next higher grade pay in the hierarchy of Grade Pay and not in the promotional hierarchy (as it was earlier). Option for fixation of pay is also available

There shall be three financial upgradations from the entry scale after 10, 20 and 30 years of appointment.

If an employee continued in the same grade for 10 years he is eligible for MACPS.  Service rendered in a lower grade will not be counted for grant of MACP after completion of total qualifying service of 10 years. For example if an employee gets regular promotion to the next grade after completion of 5 years of service in a particular grade, he will have to wait till the completion of 15 years of regular service for 2nd MACP. Likewise 3rd MACP for him will be given after completion of 25 years of regular service. Even though , after 1st regular promotion or 1st MACP, completion of 10 years of regular service in a grade or total qualifying service of 20 years or 30 years whichever is earlier will be the admissible for grant of next MACP.

Employees, who were granted financial upgradation under ACP scheme after 12 years of service, will be eligible for financial upgradation under MACPS after completion of 20 years and 30 years of service, irrespective of regular promotion given to him/her if any, between his 10 to 20 years of service or between 20 years and 30 years of service. For example if an employee was given 1st ACP under old ACP Scheme after completion of 12 years of service and a regular promotion after completion of 18 years of service, he will be eligible for 2nd MACP after completion of 20 years of service

If an employee granted ACP after 12 or 24 years of service and under sixth pay commission the grade pay has been merged with the lowest grad pay the ACP is that ACP should be ignored and he should be granted MACPS just like he/she has not been granted the upgradtaion earlier. For example the pay scales under 5th Pay commission start with Rs. 4500, Rs. 5500 and Rs. 6500 merged in the sixth pay commission with the same grade pay of Rs. 4200. So under ACP a person get an enhanced pay form the scale of 5500 to 6500 and under 5th CPC he got only the grade pay of Rs. 4200 due to merging of pay scales his ACP is considered as not given and the case should be considered for MACPS.

If an employee gets a regular promotion to an equal grade pay which he is receiving after MACP not further fixation is allowed at the time promotion. But if an employee gets a regular promotion to a higher grade pay after the grant of MACP he will get only the difference in grade pay as monetary benefit. No pay fixation (means 3% increase) is allowed in such a case.

Regular service in case of MACP is counted from the date of joining in the post in regular basis by direct recruitment or absorption or reemployment basis.

On grant of financial upgradations under MACPS, there shall be no change in designation, classification or higher status.

If a regular promotion has been denied by the employee before becoming entitlement of financial upgradation, no financial upgradation shall be allowed. However financial upgradation will be allowed due to stagnation and subsequently refuses the promotion.

Read more - MACPS – Clarifications

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Friday, 10 September 2010

VIP or Value Averaging Investment Plan

You must have heard of SIP (Systematic Investment Plan) and SIS (Systematic Investment in Shares). There is another investment pan called VIP (Value Averaging Investment Plan) slightly different from SIP. It is a new and effective method of investment which is pledged to give you a desired return. In SIP the monthly deposit is same amount but in VIP the monthly deposit is varying according to the market performance of your investment portfolio. So it ensures you a desired amount of return, whatever may be the market performance of your investment.

Before starting VIP we have to decide Monthly base contribution, Maximum and Minimum amount to be contributed, Time period of your investment and the Expected rate of return.

Suppose you wish to get 24% expected annual return (the monthly expected return is 2%) and is ready to invest $ 5000 as a minimum contribution and the maximum contribution is $ 10000

If you  got 3% Monthly return at the end of the first month, which is $ 150 and your expected return was only 2% which is $ 100. So your total investment become $5150 other than your expected value was only $ 5100. So you got $ 50 more than you expected and the next month you should invest only $ 4950 ($ 5000 - $50)

But if at the end of the first month you got only 1% Monthly return which is $ 50 and your expected return was 2% which was $ 100. So your total investment becomes $5050 only other than your expected value of $ 5100. So you got $ 50 less than you expected and the next month you should invest $ 5050 ($ 5000 + $50)

If at all last month return is exactly same as expected then there will be no change in your next month’s contribution.

Considering that markets give average return of 24% over a period of 5 years, this type of investment strategy would give higher returns than traditional Systematic Investment plan (SIP). Returns could be higher to the tune of 3% or higher depending on the risk variable you choose.

It is more useful when you want a certain amount of money after a certain period. So this new system is good and acceptable.

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Thursday, 9 September 2010

Proposal for separating PF and pension accounts

It is suggested that PF and Pension Scheme should be separated for greater transparency. Now the Employees Provident fund and Pension scheme is handling by the EPFO (Employees’ Provident Fund Organisation.

When the EPFO started operations in 1952, there was no family pension benefit for subscribers. In 1971, family pension was introduced (EDLI Scheme) wherein the spouse and other family members receive money in case of the subscriber's demise while in service. The Employees Pension Scheme (EPS) introduced in 1995 and getting benefit around 4.5 crore employees.

The committee, headed by former additional Labor Secretary S K Srivastava, has proposed a provident fund-cum-annuity scheme in which two accounts would be maintained for each member a PF account (PFA) and an Annuity Contribution (or pension) Account (ACA).

The expert group report is likely to be discussed on September 15 at the meeting of Central Board of Trustees (CBT), the apex decision making body of EPFO.

Currently, a subscriber of Employees' Provident Fund (EPF) gets only one account, but he is eligible for both provident fund and pension.

However, the report says that although subscribers get defined sum in pension through a fixed formula, the scheme is managed in a non-transparent manner.

The new arrangement, the group said, "would ensure that individual accounting of the members, addressing their long-standing demand of transparency in pension fund accounts and commensurate benefits."

At present, 8.33 per cent of workers' salary subjected to a maximum of Rs. 541 per month (8.33 % of Rs. 6500/- is considered as the maximum limit of salary for Pension Scheme, if the basic salary and D.A is more than Rs. 6500/- , only Rs. 6500/- is considered for EPS) is contributed towards EPS to which government contributes 1.16 per cent of an employees' pay, which adds up to 9.49 per cent of the salary.

It is also suggested that two separate accounts will motivate the subscriber to continue in the pension scheme even if he resigned from one firm and withdraw the P.F money. At present such an employee is tempt to withdraw both pension scheme and E.P.F. This may be avoided if both are in separate accounts and they may continue the pension scheme till superannuation.

My suggestion is that the withdrawal should be easier and the account keeping must be more and more transparent and the subscriber should check and verify their accounts through internet with their own user id and password.  And the procedures for transferring accounts when the employee left a firm and join in another one also should be easy and without more troublesome formalities. Now the withdrawal of P.F and the formalities in EPS are not easy and not subscriber friendly.  Hope that the above mentioned proposal and expected changes may make possible for such easy steps.

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Wednesday, 8 September 2010

C.C.L or Child Care Leave

Woman employees having minor children may be granted child care leave for a maximum of two years (730 days) during the entire service for taking care of their up to two minor children for rearing or for their needs such as examination, sickness etc. During this leave the employee shall be paid the leave salary equals to the pay she drawn immediately before proceeding the leave.

Conditions of C.C.L (Child Care Leave)

The Child should be less than 18 years of age.

It may be availed of in more than one spell. More than one time she can avail this leave. But the total leave should be less than or equal to two years.

She should not have any other leave in credit. But this condition is deleted by the further clarification subject to the following conditions:-

(a)   CCL will be a maximum of 3 spells in a calendar year.

(b)   CCL may not be granted for less than 15 days.

(c)   CCL can be granted during the probation period only in case of certain extreme situations where the leave sanctioning authority is fully satisfied about the need of Child Care Leave to the probationer. It may also be ensured that the period for which this leave is sanctioned during probation is minimal.

C.C.L should be treated just like earned leave. But it does not meant that the leave will  be accumulated, if not taken.

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Thursday, 2 September 2010

New Direct Tax Code (D.T.C) Narrowing Tax Savings

New Direct tax code which will be implemented from 01.04.2012 narrowing the Tax savings. Mutual Funds (ELSS) and Unit linked insurance plans excluded from tax saving instruments and the first Rs. 1,00,000/- allows only government securities and P.F. Life Insurance, Tuition fee and Mediclaim included in other Rs. 50,000/- exemption. But the LIC should be pure LIC, means it should not include any ULIP or money back plans. It should be term  insurance and the annual premium should not be more than 5% of the sum assured. So most of the present LIC policies are excluded from exemption.

Principal amount of housing loan reimbursement is also excluded from Tax exemption.

In the first step LTC included in taxable income and now there may be a change that LTC exemption will be continued.

As a whole the the New Direct Tax code is not providing any additional benefit to tax payer. The Nil Tax limit is increasing, but after two years it may normally be increased near about Rs. 2,00,000/-

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