PFRDA Chairman Hemant G Contractor has said that the pension fund regulator is disappointed with the performance of annuity schemes offered by life insurance companies. He was speaking at the 18th CII Insurance Summit held recently in Mumbai.
Contractor said, “We are not happy with the performance of annuity schemes offered by insurance companies. 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.”
Hemant further said that the pension fund regulator may consider looking at other avenues to park 40% of NPS corpus. One of the option may be allowing investors to continue with their existing NPS, he said on the sidelines of the event.
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.
