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The pension and insurance regulators are finalising a strategy to streamline the process for payouts under the National Pension System, including online purchase of annuities, easier KYC norms and a simplified form.
“Purchase of annuity is mandatory under the NPS. We are working on an online system where, once a person retires, he or she can place an online request with the NPS for buying an annuity and this can be forwarded to the annuity service provider of choice,” said Hemant Contractor, Chairman, Pension Fund Regulator and Development Authority (PFRDA).
Sources said officials from the Insurance Regulatory and Development Authority of India (IRDAI) and PFRDA, along with executives of insurance companies, which work as annuity service providers to the NPS, met last week to discuss the proposal as well as address the problem of delay and suggest possible solutions.
Delayed annuities
While Contractor did not comment on the number of annuities that are delayed, sources said about 6,000 to 7,000 annuities are yet to be issued.
“The delay in issuance of annuities was just one of the issues discussed at the meeting. There are only a few such cases,” said Contractor.
Sources said that the process for issuance of annuity will now start at least three months in advance to ensure that all details, including address, phone number and bank account details, are up to date.
NSDL, the central record-keeping agency for the NPS, will be roped in for this.
“The problem is that often the subscriber on retirement moves to his village or ancestral place, making it difficult to trace him or her,” noted the source.
The regulators have also come to an agreement to use the know-your customer (KYC) done by the IRDAI for the payout, rather than by both.
Further, a new form will also be issued to the customer to fill in details.
Under the NPS, at the time of exit from the scheme, a subscriber has to purchase an annuity from an empanelled annuity provider, which gives a regular pension.
At present, there are five empanelled annuity service providers — Life Insurance Corporation of India, HDFC Standard Life Insurance, ICICI Prudential Life Insurance, SBI Life Insurance and Star Union Daichi Life Insurance.
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