NPS Rule Change: If you also invest money in NPS, then you must know this update. Insurance regulator Irdai (IRDAI) said that it has done away with the need to submit a separate form at the time of retirement to buy pension from NPS money. The Insurance Regulatory and Development Authority of India (IRDAI) said that the decision is aimed at making it easier to do business in the insurance industry and to protect the interests of policyholders.
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Relaxation in the need to submit separate forms, IRDA said in an order, “In this direction, to make the life of senior citizens easier, IRDA has decided to set up a separate scheme for taking immediate pension products from the income of National Pension Scheme (NPS). The requirement of form submission has been relaxed. At present, retirees included in NPS have to submit a withdrawal form to PFRDA and a proposal form to insurance companies.
Insurance companies will also be facilitated, IRDA said that now the withdrawal form of NPS will be treated as the proposal form to buy pension. This will facilitate senior citizens as well as insurance companies. Pension Service Providers (ASPs) are insurance companies, regulated by the insurance regulator and listed by PFRDA. These companies give pension to NPS subscribers on the basis of the amount paid by them.
The Pension Fund Regulatory and Development Authority (PFRDA) has pension fund managers under NPS, who are entrusted with the task of judiciously investing the pension funds of the subscribers. As per PFRDA norms, members have to use at least 40 per cent of their accumulated pension corpus to purchase monthly pension products. Apart from this, the remaining amount can be taken in a lump sum.
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