Pension fund regulator PFRDA on Friday said it has empanelled six life insurance companies, including LIC and Bajaj Allianz Life Insurance, to provide annuity plans to NPS subscribers.
New Delhi: Pension fund regulator PFRDA on Friday said it has empanelled six life insurance companies, including LIC and Bajaj Allianz Life Insurance, to provide annuity plans to NPS subscribers.
"Subscribers to the National Pension System (NPS) will now have a choice of Annuity Service Providers, from whom they can choose their annuity schemes on their exit from NPS on attainment of 60 years of age," an official statement said.
Annuity plan provides pension holder an option to get the pension fund on instalment basis instead of lumpsum post retirement. The instalment could be monthly, quarterly or annually decided by the policyholder.
Pension Fund Regulatory and Development Authority (PFRDA) has empanelled Life Insurance Corporation of India, SBI Life Insurance, ICICI Prudential Life Insurance, Bajaj Allianz Life Insurance, Star Union Dai-ichi Life Insurance, and Reliance Life Insurance, for providing annuity plans to the NPS subscribers, it said.
"Subscriber can choose from any of the six above mentioned annuity service providers and can also make their choice of the annuity scheme from amongst the schemes being offered by these providers," it said.
According to NPS provisions, a maximum of 60 percent of corpus accumulated at the time of exit, normally on the attainment of 60 years of age, can be withdrawn but a minimum of 40 percent corpus has to be utilised for purchasing an annuity from one of the empanelled annuity service providers.
With the above empanelment, PFRDA has taken an important step towards providing an exit route to the subscribers, it added.
NPS was introduced on January 1, 2004, and is mandatory for central government employees (except armed forces personnel) appointed on or after January 2004. The scheme was made available to all citizens on a voluntary basis from May 1, 2009.
Even though NPS is an immensely beneficial financial product for unorganised sector employees, especially those who do not manage a steady source of income after retirement, it has received lukewarm response till now.
To popularise the scheme, PFRDA, in September 2010, introduced the Swavalamban scheme. Under this scheme, the government contributed Rs 1,000 per year to each NPS account opened in the year 2010-11 and for the next three years, i.E., 2011-12, 2012-13 and 2013-14.
To be eligible, a person has to make a minimum contribution of Rs 1,000 and maximum contribution of Rs 12,000 per annum.