NPS retirees to benefit from these new IRDAI norms on annuity proposal form

Currently, NPS pensioners must submit an exit form to PFRDA before submitting a detailed proposal form for an annuity to insurers. This practice will be discontinued. Continue reading to learn more.

From this point forward, you are no longer necessary to submit a separate proposal form for investing in an annuity if you are a pensioner under the National Pension System (NPS). Previously, NPS retirees were required to submit an exit form to the Pension Fund Regulatory and Development Authority (PFRDA) upon withdrawal and subsequently a comprehensive proposal form to the insurer while picking the desired annuity.

According to the Insurance Regulatory and Development Authority of India (IRDAI) circular dated September 13, 2022, "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 insurance regulator remarked that PFRDA collects important facts required by insurers in the proposal form in its comprehensive exit form. Furthermore, IRDAI has permitted NPS retirees to submit their life certificates digitally.

According to the circular, "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 the exercise of the power conferred under Section 14(2) (e) of the IRDA Act, 1999 and Section 34 of Insurance Act, 1938 issues direction."

At the time of maturity, NPS members must invest at least 40 per cent of their entire collected corpus in an annuity plan, according to current regulations. Furthermore, 60 per cent of the corpus may be withdrawn as a lumpsum.

A 100 per cent lumpsum withdrawal at maturity is an option for NPS members if the entire corpus is less than or equivalent to Rs 5 lakhs. Furthermore, if the NPS retiree exits before age 60, he or she must devote at least 80 per cent of the total collected corpus to an annuity plan offered by an insurance company.