The pension fund is considering allowing NPS subscriber to remain invested in NPS post retirement.
Disappointed with the performance of annuity scheme offered by the life insurance companies, PFRDA is considering allowing NPS subscriber to remain invested in NPS post retirement, said Dr. BS Bhandari, Whole Time Director, PFRDA. He was speaking to media in the sidelines of 5th CII Distribution Summit held today in Mumbai.
In fact, the pension fund regulator is likely to introduce Systematic Withdrawal Plan (SWP) for the NPS subscriber post retirement to replace the annuity, said Dr. Bhandari. “PFRDA is disappointed with the performance of annuity scheme. Hence, we may consider looking at other avenues to park 40% of NPS corpus. One of the options may be allowing investors to continue with their existing NPS with an option of SWP,” said Dr. Bhandari.
Earlier at an industry event, PFRDA Chairman, Hemant G Contractor had said that while a subscriber gets over 10% returns during the accumulation phase, she is getting less than 7% returns from annuity scheme at the disbursal phase which is not even close to inflation.
Currently, NPS subscribers have to mandatorily annuitize 40% of NPS corpus. The subscribers have to choose from an annuity scheme from a list of insurance companies recognized by the PFRDA. If a subscriber exits before attaining the age of 60 years, 80% of accumulated corpus is annuitized. In case of death, the entire accumulated corpus is paid to the nominee or legal heir of the subscriber.
IFAs can now distribute NPS by registering themselves as Retirement Advisers with PFRDA. Advisers will have to clear a NISM test to acquire this license.