Group Leave Encashment Scheme (From LIC of India)
The leave encashment benefit is a way of rewarding those employee who have not availed their eligible leave and served the company. The benefit is paid in terms of salary for the number of days of leave unavailed at the time of exit of an employee i.e. retirement, resignation or death or any other reason as per company rules.
As the employees' leave rules are company specific, the Group Leave Encashment Scheme (GLES) is offered customized to the requirements of the Corporate.
As per accounting standards AS-15 (Rev), this liability also has to be assessed by an actuarial valuation and to be recognized in the books of account.
Salient Features :
As the employees' leave rules are company specific, the Group Leave Encashment Scheme (GLES) is offered customized to the requirements of the Corporate.
As per accounting standards AS-15 (Rev), this liability also has to be assessed by an actuarial valuation and to be recognized in the books of account.
Salient Features :
- Actuarial valuation : Actuarial valuation is conducted as on the date of commencement and also at yearly intervals basically to assess the leave liability and to indicate the fund required to meet the liability.
- Funding and investment of Fund : On the basis of the above valuation the employer makes the funding to the Group Leave Encashment Policy maintained at LIC. The amount Funded is administered by LIC under the leave encashment policy for investment and claim settlement.
- Interest rates : LIC invests as per the applicable norms from time to time. Based on the income earned on such investment, LIC declares interest from time to time. The prevailing interest rates are between 9% to 9.65% depending on the size of fund.
- Pooled account : The leave encashment contribution is pooled in favour of employer and is not earmarked to any individual.
- Insurance added benefit : In case of an unfortunate death, in addition to the leave value on the date of death, provision for additional death benefit is also available which can be customized to the company.
