The pension regulator has said that subscribers will be given a specific option to defer or time the entire lump sum withdrawal, subject to a maximum of 60%, at the time of exit from the National Pension System (NPS), rather than forcing them to choose a certain percentage each and every year while going for the existing phased-withdrawal option.
The regulator has allowed the deferred withdrawal option, whereby the subscriber can time the lump sum withdrawal allowed under the NPS at the time of exit, with immediate effect. Under this, the subscribers at the time of exit from the NPS can choose to defer the withdrawal of eligible lump sum and stay invested in the NPS.
The subscriber can withdraw the deferred lump sum amount at any time before attaining the age of 70 by giving a withdrawal application or notice. If no such notice is given, the accumulated pension wealth would be automatically monetised and credited to his bank account upon attaining the age of 70.
Also, the PFRDA has empanelled seven Annuity Service Providers (ASPs) for providing annuity services to NPS subscribers. As per current NPS exit norms, the subscriber is mandatorily required to select one of the empanelled ASPs along with an annuity scheme from those offered by the chosen ASP at the time of exiting from the NPS and seeking withdrawal of accumulated pension wealth (for reasons other than death of the subscriber).
Default option for annuity is to be exercised by the subscriber at the time of selection of the ASP and choosing of an annuity scheme, PFRDA has examined the matter and decided to assist the subscriber by providing a default option. The default annuity service provider will be Life Insurance Corporation of India.
In the default annuity scheme, the annuity for life with a provision of 100% of the annuity is payable to the spouse during his/her life on the demise of the annuitant and under this option, payment of monthly annuity would cease once the annuitant and the spouse die or after death of the annuitant, without any return of purchase price. However, where the corpus is not adequate to buy the default annuity variant and from the default ASP, the subscriber has to compulsorily choose an ASP who offers an annuity at the available corpus in the account of the subscriber.