New NPS pension rules: NPS pension rules eased from today and digital life-certificate allowed

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From now on, the National Pension System (NPS) pensioners do not need to fill a separate proposal form to choose the annuity after exiting the pension corpus. “The Exit Form submitted by NPS retiree must be considered as the proposal form, for offering the immediate annuity product by the insurance companies,” insurance regulator Insurance Regulatory and Development Authority of India (IRDAI), stated in a circular on September 13, 2022.

The insurance regulator has also allowed the NPS pensioners to submit life-certificate digitally.

Currently, the NPS pensioners have to submit an “exhaustive” exit form to Pension Fund Regulatory and Development Authority (PFRDA) at the time of withdrawal. Then, they have to fill a detailed proposal form offered by the insurance companies while choosing their preferred annuity plans.

“… 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 regular noticed.

“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 in exercise of power conferred under Section 14(2) (e) of the IRDA Act, 1999 and Section 34 of Insurance Act, 1938 issues… direction,” the IRDAI circular stated.

At present, it is mandatory for an NPS subscriber to utilise at least 40 per cent of the total accumulated corpus to purchase an annuity plan at the time of maturity. The remaining 60 per cent of the NPS corpus can be withdrawn as lump sum. If the total corpus is less than or equal to Rs 5 lakh, the subscriber will have an option of complete lump sum withdrawal at maturity. For premature exit before the age of 60, an NPS subscriber needs to use 80 per cent of the total NPS corpus to buy a pension plan (annuity) from a life insurance company.

Submission of digital life certificate
Another change that IRDAI has announced to make the lives of NPS pensioners easier is the submission of digital life-certificate.

“In order to facilitate ease of living for all senior citizens who are receiving annuity payments the current framework of Aadhar based authentication for life verification certification such as Jeevan Praman, a Govt. of India initiative on biometric enabled digital service for pensioners, to be adopted,” IRDAI added in it September 13 circular.

These new rules will come into force with immediate effect, said IRDAI.

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