HomeMoneyNational Pension System (NPS) rule change: How pensioners will benefit

National Pension System (NPS) rule change: How pensioners will benefit

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From now on, the National Pension System (NPS) pensioners don’t have to fill any separate form to buy annuity from NPS proceeds at the time of retirement. Insurance Regulatory and Development Authority of India (Irdai) has said that it has relaxed the requirement for the same and it is aimed at providing ease of doing business in insurance industry for protection of interests of policyholders.

“In this direction, to bring ease of living for senior citizens, Irdai has relaxed the requirement of submitting separate proposal form for taking the immediate annuity products from proceeds of National Pension Scheme (NPS),” Irdai said in a circular.

At present, NPS retirees have to submit an exit form to PFRDA and a proposal form to insurers at the time of superannuation.

“The Exit Form submitted by NPS retiree must be considered as the proposal form, for offering the immediate annuity product by the insurance companies,” IRDAI stated in its circular dated September 13, 2022.

The circular comes into force with immediate effect, Irdai said.

Submission of life-certificate digitally

Insurance regulator has asked insurers to adopt Aadhaar-based authentication for verification of life certificate such as Jeevan Pramaan, a government initiative on biometric-enabled digital service.

What does it mean for pensioners ? Will senior citizens benfit?

Pensioners will no longer need to fill a separate proposal form to decide on the annuity after exiting the pension corpus.

According to industry experts this will benefit senior citizen NPS subscribers.

Who provides annuities to NPS subscribers?

As per the norms of PFRDA, at least 40 per cent of the accumulated pension wealth of a subscriber has to be utilised for purchase of annuity providing for monthly pension to the subscriber and the balance is paid as lump sum.

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