Insurance regulator Irdai on Tuesday said it has done away with the requirement of submitting a separate form to buy annuity from NPS proceeds at the time of retirement.
Insurance Regulatory and Development Authority of India (Irdai) said it is aimed at providing ease of doing business in insurance industry and for protection of interests of policyholders.
"In this direction, to bring ease of living for senior citizens, Irdai has relaxed the requirement of submitting separate proposal form for taking the immediate annuity products from proceeds of National Pension Scheme (NPS)," Irdai said in a circular.
At present, NPS retirees have to submit an exit form to PFRDA and a proposal form to insurers at the time of superannuation.
"However, it has been observed that, PFRDA is collecting exhaustive exit form from the NPS retirees which captures necessary details which insurance companies require in the proposal form," the insurance sector regulator said.
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Given the duplication and to facilitate ease of doing business and simple onboarding of NPS retirees for immediate annuity products, after due consultation with the industry, Irdai said the exit form submitted by NPS retiree must be considered as the proposal form for offering the immediate annuity product by the insurance companies.
The circular comes into force with immediate effect, Irdai said.
Now, the exit form of NPS will be treated as proposal form for purchasing annuity, thereby reducing the time and efforts of senior citizens as well as insurers, Irdai said.
The Annuity Service Providers (ASPs) are insurance companies regulated by Irdai and empanelled by the PFRDA to provide the annuity to the NPS subscribers from the bouquet of annuities offered by them.
They are tasked to provide a monthly annuity pension to the subscribers. The Pension Fund Regulatory and Development Authority (PFRDA) has pension fund managers under the NPS who are tasked to invest the pension corpus of the subscribers in a judicious and prudent manner.
As per the norms of PFRDA, at least 40 per cent of the accumulated pension wealth of a subscriber has to be utilised for purchase of annuity providing for monthly pension to the subscriber and the balance is paid as lump sum.
Further, to increase adoption of technology, it has asked insurers to adopt Aadhaar-based authentication for verification of life certificate such as Jeevan Pramaan, a government initiative on biometric-enabled digital service.