1 min read.Updated: 28 Jul 2021, 12:49 PM ISTLivemint
The surrender requests can be handled by ASPs that are empanelled under PFRDA based on the specific annuity scheme features, contractual terms, surrender clause and applicable Irdai guidelines
Annuity Service Providers (ASPs), which are life insurance companies including LIC, HDFC Life, ICICI Prudential Life, SBI Life, can now handle surrender requests from NPS subscribers and intermediaries without referring to PFRDA, Central Record Keeping Agency or National Pension System Trust.
Pension Fund Regulatory and Development Authority said the surrender requests can be handled by ASPs that are empanelled under PFRDA based on the specific annuity scheme features, contractual terms, surrender clause and applicable Insurance Regulatory and Development Authority of India (Irdai) guidelines.
According to the National Pension System (NPS), subscribers are allowed to exit as per PFRDA (exit and withdrawal) regulations. While exiting NPS, regulations mandate subscribers to utilize a specified amount of accumulated corpus to purchase an immediate annuity.
The role of ASPs is to provide different kinds of immediate annuities to the subscribers at the time of exit from the NPS and to provide minimum immediate annuity variants options as required by the PFRDA, and to be able to offer any new variant as needed by the PFRDA from time to time in the interest of subscribers in conformity with the Insurance Act and Irdai Act, regulations.
However, Pfrda has been receiving requests for the surrender of annuity policies post its issuance from the annuitants or from other intermediaries with whom such annuitants were associated earlier as NPS subscribers.
The Pfrda circular issued on 22 July said, "In view of the above, ASPs may handle the surrender requests received from annuitants and intermediaries including Nodal officers of Government Sector without referring to PFRDA, National Pension System Trust (NPST) or Central Record Keeping Agency (CRA). The surrender requests can be handled based on the specific annuity scheme features, contractual terms, surrender clause and applicable IRDAI guidelines."
The surrender is of two types: surrender due to the applicability of old pension in case of government sector subscribers and surrender due to personal reasons, including critical illness.
"ASPs are also advised to deal with those cases of surrender on their own, after conducting their own due diligence in line with the existing provisions of the contract entered with the subscriber at the time of issue of the annuity policy. They also need to ensure that the Annuitants are made well aware of the surrender implications," the circular added further.