The Hindu Business Line : Pension disbursement account from HDFC Bank

WORRIED about how to invest your retirement money safely and prudently? Fortunately, quite a few investment options are available to get the best out of your pension funds. The `Pension Disbursement Account' from HDFC Bank is one such. The scheme directly competes with pension accounts offered by public sector banks.

Requirements

You need to be the member of `Employees Pension Scheme 1995' to open this account. Along with the filled in application form you need to submit a photo of yourself along with spouse, driving licence or PAN card as identity proof, and a copy of the letter from your company indicating your pension and emolument details.

Once you open the account you need to intimate the details of your savings account to your employer and the Employment Provident Fund Organisation (EPFO). On your retirement, the EPFO will forward the pension payment order (PPO) to the nodal office of the bank which, in turn, will intimate you of its receipt. You need to hand over the pensioner's portion of the PPO to the bank to activate pension payment.

Features

In addition to the regular facilities that are offered with a plain vanilla saving account, such as free ATM/debit card, phone banking and net banking facilities, the account also offers the following features:

Zero balance: There is no need to maintain any minimum balance in the account;

Free fund transfer: Funds can be transferred from your account to another HDFC Bank account in any city or branch.

Investment options: You can hold your funds in the savings account and get interest at the prevailing rate ( 3.5 per cent per annum, at present). You can also opt for fixed deposits, which will offer you an additional 0.25 to 0.5 per cent interest over the prevailing rate, depending on the tenure of the deposit. However, several public sector banks, too, offer additional interest on their term deposits for pensioners and senior citizens.

Other investment schemes: Depending on your risk appetite and your returns expectation, the bank also offers investment schemes such as mutual funds, tax saving bonds among the others.

Account transfer: You can also transfer your account to another branch of the bank or to any other public sector bank authorised to open/maintain pension accounts.

Other features: The bank will intimate changes in rates of pension or dearness allowance, if any. It will also issue Form 16A for tax deducted at source in the immediately previous financial year. You can also pay your utility bills free of cost.

However, this account cannot be opened earlier than two months before your date of retirement. And, you cannot delegate the authority to operate the account through a mandate or power of attorney.

Suitability

This product is suitable if you are looking for more than just safety and expect only a small return from your savings bank account. Retirees looking for a no-frills savings account can opt for public sector bank pension accounts. Retirees who already hold regular savings accounts can also convert them into pension accounts.

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