PFRDA Circulars - Option to defer Annuity purchase under NPS at the time of exit
CIRCULAR
PENSION FUND REGULATORY AND DEVELOPMENT AUTHORITY
PFRDA/ 2013/14/ PDEX /9 September 17, 2013
To,
All Govt depts./PAO’s/DDO/ POP’s, CRA & other stakeholders
Dear Sir/ Madam,
Sub: Option to defer Annuity purchase under NPS at the time of exit
As per the Exit guidelines of PFRDA for National Pension System (NPS)
subscribers, a subscriber on attaining the Normal Retirement Age
(applicable to Govt. sector subscribers) or upon attaining 60 years – is
required to compulsorily annuitize at least 40% of your pension wealth
and the remaining 60% can be withdrawn as a lump sum.
Also, a subscriber wishing to exit from NPS before the normal retirement
age or before attainment of 60 years is allowed to exit subject to the
condition that a minimum of 80% of accumulated pension wealth needs to
be mandatorily utilized for purchase of annuity that provides for the
monthly pension to the subscriber.
Presently, withdrawal of permissible lump sum withdrawal (60%) upon exit
can be deferred by the subscriber to a later date but not beyond
attaining 70 years of age. This is to take care of the reasons like
unfavorable Market conditions or there being no requirement of the funds
at that particular time.
Due to the upheavals in the market conditions including the bond market
and the swings in NAV’s of the debt funds including NPS in the recent
past, feedback has been received from various stakeholders that the
subscribers be given an option to defer or time the annuity purchase
(subject to a minimum of 40%/80% of accumulated pension wealth as
applicable) akin to the deferment option for the lump sum withdrawal
that is permitted currently under NPS.
PFRDA after examining the issued has approved the “Deferment option” for
the annuity purchase at the time of exit from NPS with condition that
such deferment can be for a maximum period of 3 years. One can initiate
the annuity purchase option at any time before lapse of 3 years from the
date of such deferment, by giving an application or notice to the
Central Record Keeping Agency.
If no such notice is given before the lapse of 3 years from such date of
deferment, the percentage of accumulated pension wealth as provided by
the subscriber in the NPS withdrawal application form (subject to a
minimum of 40%/80% of accumulated pension wealth as applicable) for
purchase of annuity would be automatically monetized and such amount
would not earn any investment income or interest to the subscriber
thereafter.
This is for the information of all concerned. The circular has also been placed on PFRDA website at http://www.pfrda.org.in and CRA website at http://www.npscra.nsdl.co.in.
Yours faithfully,
Sd/-
Venkateswarlu Peri
General Manager
Source: www.pfrda.org.in