The government has cleared a second round of voluntary retirement scheme for shedding 10 per cent of the total workforce of public-sector general insurance companies involving a cash outgo of Rs 1,000 crore (Rs 10 billion).

"There was a proposal from the PSU general insurance companies for offering VRS to all class of officials. It has been given in-principle approval," banking secretary N S Sisodia said in New Delhi on Friday.

This will be the second VRS as the General Insurance Public Sector Companies Association offered an early retirement scheme to over 1,200 development officers in 2002.

"The new VRS scheme is expected to come up by December this year," joint secretary (insurance) G C Chaturvedi said.

Two of the companies -- New India Assurance and United India Insurance -- have already obtained their board's permission for the VRS. There has been no objection from the employees unions so far.

He said the VRS would be offered to about 10 per cent of the 86,000 employees.

The entire VRS expense would be borne by the insurers and government would not have to pay anything for the scheme.

"The total cash outgo from the four insurance companies would be about Rs 1,000 crore, of which a one-time payment would be made, aggregating Rs 500 crore (Rs 5 billion)," Chaturvedi said.

The VRS would be similar to the one offered to bank employees, he said. Employees above the age of 40 years would be considered for the VRS. The scheme envisages 60 days salary for every year of service or the salary for the remaining years of service, which ever is less.