Pension Fund Regulatory and Development Authority
Circular No. PFRDA/2022/32/ASP-EXIT/03 Dated: 14 Nov 2022
All NPS Stake Holders
Subject: Parallel Processing of Exit and Annuity components for the benefit of NPS Subscribers
PFRDA provides digitally enabled exit solutions for its Subscribers through Aadhaar / Two Factor Authentication (2FA). Under NPS, the Subscribers at the time of exit can avail of a defined amount as a lump sum and the balance amount has to be utilized for the purchase of immediate Annuity from the empanelled Annuity Service Providers (ASP). ASPs are Life Insurance Companies under the regulatory ambit of the Insurance Regulatory & Development Authority of India (IRDAI).
2. Hitherto, Subscribers under NPS at the time of their exit submit the online/offline withdrawal form (Annexure A) to the associated intermediaries viz nodal offices, POPs etc. The NPS withdrawal form is quite exhaustive and contains all the required information for issuing an Annuity and processing the lump sum. Post-processing of the withdrawal, the eligible amount is paid as a lump sum to the Subscribers’ Bank Account and the information of those Subscribers is shared with ASPs for processing the Annuity request. ASPs engage with the Subscribers for obtaining the application for the issue of Annuity i.e. Proposal form and complete the other formalities. In the existing process, the Subscribers submit the exit form to the intermediaries of PFRDA and apply for an annuity to the ASPs selected by them.
3. PFRDA engaged with IRDAI on simplifying the process of issuing an Annuity by considering the NPS withdrawal form as the Annuity Proposal and the same was agreed by IRDAI after due consultation with the Insurance industry. The communication issued by IRDAI on Immediate Annuity Products dt. 13.09.2022 is provided at Annexure B.
4. The benefits of the coordinated action by both financial regulators are manifold towards the benefit of Subscribers & stakeholders as described below:
a. Ease of Annuity and speed of its issuance
b. Parallel Processing of Lump sum payment and Annuity issuance
c. Payment of Retirement Income through Annuity immediately after one’ s retirement and hence uninterrupted income flow to the retirees ensured.
d. Ease of Old Age Income Support.
e. Ease of doing business for the associated stake holders.
5. All Subscribers are hereby informed that at the time of initiation of the exit request, the completely filled proposal form along with the specified supporting documents including KYC (Refer Page no. 5 of Annexure A) is to be uploaded in the respective CRA system through their login credentials. The nodal officers, POPs & NPST are advised to ensure the same for the benefit of Subscribers.
6. Based on the response and feedback on the common proposal from the stakeholders & subscribers, PFRDA proposes to make the upload of the Withdrawal form/document mandatory at a future date.
7. In order to facilitate ease of living for all senior citizens including NPS Retirees who are receiving periodical annuity payments, Aadhar-enabled authentication for life verification certification viz Jeevan Praman (Govt. of India’s initiative on bio metric enabled digital service for pensioners) shall be provided.
This circular is being issued to protect the interests of subscribers and to regulate,
promote and ensure orderly growth of the National Pension System and pension schemes to which the Act applies.
Digitally signed by
K MOHAN GANDHI
Chief General Manager
Cir No: IRDAI/Life/CIR/MISC/188/09/2022 | Dated: Date: 13 September 2022
All Life Insurers
Subject: – Immediate Annuity Products
1. This has reference to the immediate annuity products offered by the life insurance companies to the subscribers of NPS retirees. In order to offer these products, life insurance companies in accordance with Regulation 8 (1) of IRDAI (Protection of Policyholders’ Interests) Regulations, 2017, are using proposal form.
2. In this regard, currently all insurance companies to offer immediate annuity products, collect proposal form from the NPS retirees. However, it has been observed that, PFRDA is collecting exhaustive exit form from the NPS retirees which captures necessary details which insurance companies require in the proposal form.
3. 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 exercise of power conferred under Section 14(2) (e) of the IRDA Act, 1999 and Section 34 of Insurance Act, 1938 issues the following direction:
(i) The Exit Form submitted by NPS retiree must be considered as the proposal form, for offering the immediate annuity product by the insurance companies.
(ii) In order to facilitate ease of living for all senior citizens who are receiving annuity payments the current framework of Aadhar based authentication for life verification certification such as Jeevan Praman, a Govt. of India initiative on biometric enabled digital service for pensioners, to be adopted.
4. In this regard, the requirements of Section 41 and Section 45 of Insurance Act 1938 shall be considered as compliant as no direct solicitation of business is involved.
The circular comes into force with immediate effect.