More pains than gains in bonanza for VRS takers

MUMBAI: Here’s some bad news for those who were celebrating that VRS takers above 55 will be eligible for the senior citizen scheme.

The eligibility conditions are such that they will exclude virtually all those who have taken a VRS over the past few years. For those who still qualify for investment, there will be little flexibility in spreading out the investment over a period of time.

According to the details of the scheme, a person who has crossed 55 but is less than 60 and has retired under a voluntary retirement scheme or a special voluntary retirement scheme needs to open an account within three months from the date of retirement. In addition, a certificate from the employer containing various details, too, will have to be produced.

Under present circumstances, this means that anyone who has retired under a VRS in the last year or before will not be eligible for the benefits. It has to be remembered that a vast multitude of bank employees took VRS a few years ago. In the last year, quite a few PSUs as well as private companies brought in such schemes.

Analysts and chartered accountants believe that since all of these are beyond the three-month window, the employees will not be eligible to participate in the investment scheme.

Therefore, only those who take a VRS from now on and those who have taken a VRS in the last three months will be eligible for investment in the senior citizen scheme. Hence those who fall within the three-month window have to open an account within the stipulated time.

This is not all. Each time a deposit is made, a new account will have to be opened because rules say that one can make only one deposit in the account. Investment advisors say most people will not have Rs 15 lakh to put at one go and hence they will stagger their investments as and when funds are available.

The scheme makes provision for multiple accounts saying that a depositor may operate more than one account though more than one deposit account cannot be opened in a calendar month in the same deposit office. Further the overall Rs 15 lakh limit cannot be breached.

Consider a situation where a VRS taker aged between 55 and 60 manages to make the investment within three months of retirement. If his next deposit is outside this period, he will be disqualified.

In most cases, people will not be able to invest the entire sum received as VRS into the account because often the payment is staggered and the entire money does not come at the same time. Further, one might also have other obligations to meet immediately at the time of retirement and hence the entire investment might not be possible at a go.