NPS: New Rules - Latest update from IRDAI

New NPS Rules: Insurance Regulatory and Development Authority of India (Irdai) has eased rules that required submitting a separate form to buy the Immediate Annuity products from proceeds of the National Pension Scheme (NPS) at the time of retirement. The initiative is aimed at bringing ease of living for senior citizens. "It is aimed at providing ease of doing business in the insurance industry and for protection of interests of policyholders," the IRDAI said in a circular.

At present, NPS retirees are required to submit an exit form to the Pension Fund Regulatory and Development Authority (PFRDA) and a proposal form to insurers at the time of superannuation.

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 retirees will be treated as the proposal form for offering the immediate annuity product by the insurance companies.

According to the insurance regulator, this will reduce the time and effort of senior citizens as well as insurers. 

Also, IRDAI is encouraging the adoption of technology among insurers and have advised them to adopt Adhaar-based authentication for verification of life certificate, such as Jeevan Pramaan, a Government of India initiative on biometric-enabled digital service.

The circular comes into force with immediate effect, 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 the purchase of an annuity providing for a monthly pension to the subscriber and the balance is paid as a lump sum.

With PTI inputs