The National Pension System (NPS) mandates that subscribers must use at least 40% of the maturity corpus to buy an annuity product. We ask experts in the industry if this rule should stay or be changed
Sandeep Shrikhande, CEO, Kotak Mahindra Pension Fund Ltd
The vision statement of the Pension Fund Regulatory and Development Authority (PFRDA) states that it aspires to be an organized pension system to serve the old-age income needs of people on a sustainable basis. The basic objective of any pension plan is not only to provide an attractive return on accumulations but also to ensure that a subscriber is able to generate a decent income post retirement.
Giving an option to commute, or withdraw lump sum, defeats the very purpose of an organized pension. This increases the probability of the lump sum being en-cashed and utilised to acquire assets that may not generate a regular income.
