NPS rule change: Market-linked, defined contribution product administered by the Pension Fund Regulatory and Development Authority (PFRDA), National Pension System (NPS) offers affordable social security to citizens. It is low-cost, tax-efficient plan to which both employees and employers contribute.
Come April 1, 2023, the PFRDA has made uploading select documents mandatory for subscribers. The move is aimed at making annuity payments faster and simpler after exiting the NPS. In a circular dated February 22, 2023, the body said, “In the interest of Subscribers and to benefit them with the timely payment of annuity income, the upload of the documents shall be mandatory with effect from 1st April 2023.”
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What changes for NPS subscribers from FY24?
The PFRDA has asked the subscribers and the associated nodal officers/POPs/corporate to ensure that the following documents are uploaded to the respective Central Record Keeping Agency (CRA) user interface. The documents are:
a) NPS exit/withdrawal form
b) Proof of identity and address as specified in the withdrawal form
c) Bank account proof
d) Copy of the Permanent Retirement Account Number (PRAN) card
The new rule will come into effect from the next financial year i.e. April 1, 2023.
“All nodal offices/ POPs/corporate can educate the associated subscribers about the importance of upload of documents and perform suitable quality checks about the legibility of those documents,” the PFRDA said in its circular.
Steps for processing of Exit Request by Subscriber (Govt/Non Govt) – Paperless Mode
a) The subscriber will initiate an online exit request by logging into the CRA system.
b) At the time of initiation of request, the relevant messages about e-Sign/OTP authentication, authorisation of request by nodal office/POP, etc. displayed to the subscriber.
c) During request initiation, details like address, bank details, nominee details, etc. will be auto-populated from the NPS account.
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d) Subscriber will select fund allocation percentage for lump sum/annuity, annuity details, etc.
e) The bank Account of the subscriber (registered in CRA) will be verified through online bank account verification (penny drop facility).
f) Subscriber needs to mandatorily upload KYC Documents (identity & address proof), copy of PRAN card/ePRAN, and bank Proof at the time of submitting exit request.
g) Scanned documents should be appropriate i.e. scanned images should be legible.
h) Subscriber authorises the request by using any one of the two following options to make the process paperless:
1) OTP Authentication – Distinct OTPs will be sent to mobile numbers and email IDs of the subscribers.
2) e-Sign – Subscribers will e-Sign the request using Aadhaar
NPS Withdrawal Process Eased
In a move to ease the withdrawal process for NPS subscribers, the PFRDA had last year did away with the need to fill out a separate proposal form to choose the annuity after exiting the pension corpus. The exit form submitted by the NPS subscribers would be treated as an annuity proposal form, the pension body had stated.
It may be noted that an NPS subscriber currently is required to utilise at least 40 per cent of the total accumulated corpus to purchase an annuity plan at the time of maturity. The remaining 60 per cent of the NPS corpus can be withdrawn as a lump sum.
