Business News/ Money / Personal Finance/  National Pension System (NPS) rule change: How pensioners will benefit

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 ? 

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

Will senior citizens benefit?

Senior citizens who subscribe to NPS will benefit from this, according to industry experts. Amit Gupta, MD, SAG Infotech said to provide ease of doing business in the insurance industry and protect the interests of policyholders, Irdai relaxed the requirement for the same as Annuity purchases can be made from NPS proceeds without any separate form for NPS pensioners. 

He added that the major agenda to do this to ease the lives of senior citizens, IRDAI has relaxed the requirement of submitting a separate proposal form for taking immediate annuities derived from NPS.

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.

Sangeeta Ojha
A business media enthusiast. Writes on personal finance, banking and real estate.
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Updated: 15 Sep 2022, 01:54 PM IST
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