NPS Rule Change for Faster Annuity Payments from 1st April 2023

The Pension Fund Regulatory and Development Authority (PFRDA) issued a circular stating that National Pension Scheme (NPS) subscribers must mandatorily upload certain documents to receive annuity income payments faster. The PFRDA said that to benefit NPS subscribers with timely annuity income payments, uploading documents is mandatory from 1st April 2023 to withdraw their pension corpus. 

The NPS subscribers must upload the following documents mandatorily before applying for NPS withdrawal:

• NPS withdrawal/exit form
• Proof of address and identity as specified in the withdrawal form
• Bank account proof
• Permanent Retirement Account Number (PRAN) copy

The PFRDA has requested associated POPs, nodal officers and corporate to educate NPS subscribers about the necessity of uploading documents and conduct quality checks on the legibility of the documents. Subscribers will have a paperless and easy NPS withdrawal procedure.

Following is the process to withdraw NPS for subscribers:

• Log in to the Central Recordkeeping Agency (CRA) and initiate an online exit request.
• Messages about OTP authentication/e-Sign, authorisation of request by POP/nodal office, etc., will be displayed during the initiation of the request.
• Details like nominee, bank, and address will be auto-populated from the NPS account.
• Choose the fund allocation percentage for the lump sum and annuity, and provide annuity details and other required information.
• The online bank account verification process will verify the subscriber’s bank account, which was registered in the CRA.
• Know-your-customer (KYC) documents, such as address and identity, PRAN card copy/ePRAN, and bank proof, must be uploaded when submitting the exit request. The scanned documents uploaded should be appropriate and legible.
• The NPS subscriber authorises the request using OTP authentication or e-Sign using the Aadhaar.

At maturity, NPS subscribers must put at least 40% of the total NPS corpus into buying an annuity plan. They can withdraw the remaining 60% of the NPS corpus as a lump sum. An NPS subscriber can withdraw the entire NPS corpus as a lump sum at maturity when the total corpus is less than Rs.5 lakh. An NPS subscriber who plans to retire early should purchase an annuity from a life insurance firm for 80% of the total NPS corpus.

For any clarifications/feedback on the topic, please contact the writer at mayashree.acharya@clear.in