The Insurance Regulatory and Development Authority of India (Irdai) has now done away with the requirement of submitting a separate form to buy an annuity from the NPS proceeds at the time of retirement, according to an official statement. It said the move is aimed at providing ease of doing business in the insurance industry and for the 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). In current scenario, NPS retirees submit an exit form to NPS and a proposal form to insurers at the time of superannuation,” the insurance sector regulator said in the statement.
It added that now, the exit form of NPS will be treated as a proposal form for purchasing annuity, thereby reducing the time and efforts of senior citizens as well as insurers. Also, in order to increase the adoption of technology, insurers have been advised to adopt Aadhaar-based authentication for verification of life certificate, such as Jeevan Pramaan, a Government of India initiative on biometric enabled digital service.
“It has been observed that, PFRDA is collecting exhaustive exit form from the NPS retirees which captures necessary details which insurance companies require in the proposal form,” the insurance sector regulator said. Given the duplication and to facilitate ease of doing business and simple onboarding of NPS retirees for immediate annuity products, after due consultation with the industry, Irdai said the exit form submitted by NPS retiree must be considered as the proposal form for offering the immediate annuity product by the insurance companies.
The circular comes into force with immediate effect, Irdai said. Now, the exit form of NPS will be treated as proposal form for purchasing annuity, thereby reducing the time and efforts of senior citizens as well as insurers, Irdai said. The Annuity Service Providers (ASPs) are insurance companies regulated by Irdai and empanelled by the PFRDA to provide the annuity to the NPS subscribers from the bouquet of annuities offered by them.
They are tasked to provide a monthly annuity pension to the subscribers. The Pension Fund Regulatory and Development Authority (PFRDA) has pension fund managers under the NPS who are tasked to invest the pension corpus of the subscribers in a judicious and prudent manner. 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.
(With Inputs From PTI)
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