Parallel Processing of Exit and Annuity components for the benefit of NPS Subscribers: PFRDA

Parallel Processing of Exit and Annuity components for the benefit of NPS Subscribers: PFRDA Circular dated 14.11.2022

PENSION FUND REGULATORY AND DEVELOPMENT AUTHORITY

CIRCULAR

PFRDA/2022/32/ASP-EXIT/03

14 Nov 2022

To
All NPS Stake Holders

Subject: Parallel Processing of Exit and Annuity components for the benefit of NPS Subscribers

PFRDA provides digitally enabled exit solutions for its Subscribers through Aadhaar / Two Factor Authentication (2FA). Under NPS, the Subscribers at the time of exit can avail of a defined amount as a lump sum and the balance amount has to be utilized for the purchase of immediate Annuity from the empanelled Annuity Service Providers (ASP). ASPs are Life Insurance Companies under the regulatory ambit of the Insurance Regulatory & Development Authority of India IRDAI).

2. Hitherto, Subscribers under NPS at the time of their exit submit the online/offline withdrawal form (Annexure A) to the associated intermediaries viz nodal offices, POPs etc. The NPS withdrawal form is quite exhaustive and contains all the required information for issuing an Annuity and processing the lump sum. Post-processing of the withdrawal, the eligible amount is paid as a lump sum to the Subscribers’ Bank Account and the information of those Subscribers is shared with ASPs for processing the Annuity request. ASPs engage with the Subscribers for obtaining the application for the issue of Annuity i.e. Proposal form and complete the other formalities. In the existing process, the Subscribers submit the exit form to the intermediaries of PFRDA and apply for an annuity to the ASPs selected by them.

3. PFRDA engaged with IRDAI on simplifying the process of issuing an Annuity by considering the NPS withdrawal form as the Annuity Proposal and the same was agreed by IRDAI after due consultation with the Insurance industry. The communication issued by IRDAI on Immediate Annuity Products dt. 13.09.2022 is provided at Annexure B.

4. The benefits of the coordinated action by both financial regulators are manifold towards the benefit of Subscribers & stakeholders as described below:

a. Ease of Annuity and speed of its issuance
b. Parallel Processing of Lump sum payment and Annuity issuance
c. Payment of Retirement Income through Annuity immediately after one’s retirement and hence uninterrupted income flow to the retirees ensured.
d. Ease of Old Age Income Support.
e. Ease of doing business for the associated stake holders.

5. All Subscribers are hereby informed that at the time of initiation of the exit request, the completely filled proposal form along with the specified supporting documents including KYC (Refer Page no. 5 of Annexure A) 1s to be uploaded in the respective CRA system through their login credentials. The nodal officers, POPs & NPST are advised to ensure the same for the benefit of Subscribers.

6. Based on the response and feedback on the common proposal from the stakeholders & subscribers, PFRDA proposes to make the upload of the Withdrawal form/document mandatory at a future date.

7. In order to facilitate ease of living for all senior citizens including NPS Retirees who are receiving periodical annuity payments, Aadhar-enabled authentication for life verification certification viz Jeevan Praman (Govt. of India’s initiative on bio metric enabled digital service for pensioners) shall be provided.

This circular is being issued to protect the interests of subscribers and to regulate, promote and ensure orderly growth of the National Pension System and pension schemes to which the Act applies.

Digitally signed by
K MOHAN GANDHI
Chief General Manager

Source: PFRDA