FUNDS SECTION

This section of finance department deals with the reserves or accumulation of money which is set aside
for specific purpose and the final settlement of the payments to the employees in relation with Payroll
Section. The criteria of payment for the final settlement include:

 Retirement
 Death
 Resignation
 Dismissal/ termination

There are separate rules for each case. Each payment is done accordingly.

The funds which Sui Southern Gas Company Limited deals with are:

1. Pension Fund
2. Provident Fund
3. Gratuity Fund
4. Benevolent Fund

PENSION FUND:

Literally, the term pension means,

‘Regular payment given to people who have crossed a certain age limit to enable them to carry out
their living expenditures without working’

Company provides 20% of the basic salary each month in the pension fund of the employee.

 On the death of an employee, 50% of the pension goes to the person’s widow.
 In the case where widow is also expired, 10% pension is given to the children under the
age of 18 years.

BENEVOLENT FUND:

The term benevolent means,

‘Showing goodwill, doing welfare or help to others’

This is another kind of retirement benefit given to executive employees after their retirement.

After being the member of this fund, employees need to pay 1.1% of their basic salary until a minimum
number of five years as a contribution.
The benefits of benevolent fund include:

 Executives receive the money till 5-years after their retirement.

 If person dies, and he is a member of benevolent fund, then his/her family receives this money
till 5- years.
 This is an additional benefit, excluding pension, gratuity and provident fund.

MONTHLY GRANT

PAY RANGE (RUPEES) MONTHLY BENEVOLENT GRANT (RUPEES)

Upto 15,000 1500
15,001-20,000 1650
20,001-25000 1800

 The monthly grant increases by Rs.150 for every Rs.5000 increase in salary.

WORKERS’ PROFIT PARTITIAN FUND (WPPF):

A law was introduced in late sixties, which made it mandatory for companies/firms/individual
businesses, to distribute five per cent of their pre-tax profit to workers under WPPF. But the law was so
framed that only a handful of workers, drawing minimum wages, (the upper limit being Rs 5,000) were
eligible to share WPPF under a formula.

For Sui Southern Gas Company Limited, the spirit behind the WPPF laws was to make profitable business
share their fortunes with the workers. Another goal envisaged at the time of its creation could be to
lure workers to improve their productivity to make their company profitable so that they may qualify for
this extra bonus.

GRATUITY FUND:

Gratuity fund refers to,

‘Amount of money given for services rendered.’

Or

‘Monetary award given for meritorious services rendered without claim or obligation’

Company provides 8% of the basic salary each month in the Gratuity fund of the employee. This
appears as a cost to the company.

 On the death of the employee, gratuity of 40 days’ basic salary is given to the widow
along with 50% of the pension.
 No gratuity will be paid if employee is dismissed from the company.
  On retirement, if the employee opts for pension, then 20 days’ gratuity will be given.
 On retirement, if the employee opts for full gratuity of 50days, no pension will be given.
 Service exceeding six months is counted as a full year for service and calculation of
gratuity. For less than six months, gratuity shall not count.

PROVIDENT FUND:

The term literally means,

‘Providing carefully for the future’

The provident fund grants the employees retirement benefits. It enables the employees to save fraction
of their salary to be used in a situation when the employee is no longer able to work. The provident
fund primarily applies to retirement, but it also covers sickness, physical or mental disability or death.

The moral is to give monetary security to employees when they retire.

 For non-executives, 8.33% of the basic salary is deducted from the payroll and is put into the
provident fund.
 For executives, 7.5% of their basic salary is deducted and is put into the provident reserve.

This section holds the money from the employees’ payroll and puts it in the A account which is called
‘Employee Contribution”. The company puts exactly the same amount in B account, also known as
‘Company Contribution.”

The person can withdraw the money from the fund as loan to acquire property, for marriage expenses
etc. Mr. Zafar Vaqar handles the loan payments and installment deductions from the employees’ salary.

The loans provided to the employees by Sui Southern Gas Company are of two kinds:

 Refundable loan
 Non-refundable loan

REFUNDABLE LOAN:

 The employee will be able to get amount equals to his/her 6 basic salaries
 17% markup is implied
 5 years service is necessary to qualify for the loan
 The interest deteriorates each month in refundable loan.
 On returning the amount taken as a loan, the money in the fund again increases and the
employee will be given a profit on whatever the fund amount totals to.
 For general staff and non-executives, the loan is to be returned in 30 monthly installments or
205 years.
 For executives, the loan is to be paid in 48 monthly installments or 4 year time period.
NON-REFUNDABLE LOAN:

 The employee will be able to get amount equals to his/her 18 basic salaries
 No markup implied
 Applying for non-refundable loan is like the employee is permanently withdrawing the money
form his/her fund.
 The profit which a person gets on keeping that fund will vanish.
 The employee needs to put the property papers as collateral to acquire non-refundable loan.

At 50 years of age, the employee can withdraw 60% money from his/her fund without any markup. In
this case, there is no need to give any collateral.

INVESTMENTS:

The cash present with the FUNDS SECTION is then invested in:

o Defense Saving
o National Saving
o Mutual Funds
o Shares
o Financial institutions/ Banks
o Pakistan Investment Bonds (PIB)
o Federal Investment Bonds (FIB)

These short-term and long-term investments produce profits which are then given to the employees on
the basis of their contribution in the funds and the investments.

INSURANCE SECTION

 Short term insurance

 Long term insurance

Sui Southern Gas Company Limited has the following insurance policies

 Group Life Insurance

 New Jubilee Life Insurance
 State Life Insurance
 Century Insurance
  NIC (National Insurance Company)

The employees are distributed in three categories

1. Executives
2. Non-Executives/Sub-ordinates
3. 3rd Party Contract

If employees die during the service time period, then:

o For General Staff or Non-Executives, Rs.200,000 are insured.

o Executives are paid 12 Gross of their basic salary