National Pension System (NPS) subscribers can choose the pension scheme and Annuity Service Providers (ASPs) of their choice at no extra fee or charges
National Pension System (NPS) subscribers can choose the pension scheme and Annuity Service Providers (ASPs) of their choice at no extra fee or charges, according to a recent clarification issued by Pension Fund Regulatory and Development Authority (PFRDA).
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“NPS Subscribers are entitled to exercise their individual choice when selecting an Annuity scheme and ASP, based on their individual requirements and specific needs,” PFRDA said in a circular dated July 27, 2023.
At the time of exit from NPS, subscribers are mandatorily required to purchase an annuity that provides a monthly or periodical annuity (pension) from an ASP empanelled with the Authority. In certain situations, a limited exemption has been allowed by the Authority from the requirement of the purchase of an annuity.
The freedom to choose the pension scheme and ASP will help subscribers in optimizing their retirement planning experience.
“By empowering subscribers to exercise their individual choice in selecting the Annuity scheme and ASP, the aim is to optimize the retirement planning experience, enhance overall satisfaction for NPS Subscriber(s) and be compliant of the law,” the regulator said.
Fees and Charges
According to the circular, there is no extra fee or charges on the subscribers other than the premium approved by the insurance regulator (IRDAI) for the annuity product.
“There shall be no additional fees or charges on the subscriber(s) other than the premium approved by the Insurance Regulatory and Development Authority of India (IRDAI) for the annuity product,” PFRSA said.
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“However, any taxes or other levies payable to the Government, or any charges by the regulator are excluded from this limitation,” it added.
Further, the pension regulator said that there should be no additional intermediation expense or charge in respect of the annuity product issued to the subscribers. “ASP can deploy no agency or intermediary for sourcing Annuity from NPS Subscribers. The annuities under NPS are to be issued under direct channel,” it said.
The responsibility of monitoring compliance with the duties and obligations as laid down under the Exit Regulations and Circulars issued by the Authority is with the compliance officer of the ASP.
“ASP and the Compliance Officer shall also take steps to address the grievances reported to them by subscribers who have
purchased annuities from the ASP, upon exit from the NPS,” the regulator said.
