The Pension Fund Regulatory and Development Authority (PFRDA) has announced a list of documents that subscribers who have exited the National Pension System (NPS) have to upload starting April 1, 2023 to expedite and streamline the process of making annuity payments.
PFRDA had announced in a circular dated February 22, 2023 that this mandatory requirement would be in the best interest of subscribers, ensuring that they receive their annuity income in a timely manner.
Changes For NPS Subscribers:The PFRDA has requested that subscribers and associated nodal officers, points of payments, and/or corporate personnel ensure that they upload the following documents to the user interface of the respective central recordkeeping agency (CRA). The mandatory documents that need to be uploaded 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)
“All nodal offices, PoPs, and corporate can educate the associated subscribers about the importance of uploading documents and performing suitable quality checks about the legibility of those documents,” PFRDA said.
Last year, PFRDA had announced that NPS subscribers would not be required to complete a separate proposal form for selecting the annuity plan once they exit the pension corpus. Instead, the exit form submitted by NPS subscribers would be considered as an annuity proposal form, as per the statement by the pension body.
“The common proposal for exit from NPS and for buying the annuity from annuity service providers (ASP) facilitates parallel processing of lump sum component and annuity due to which the time taken by ASPs while issuing annuity policies is significantly reduced, which results in faster subscriber servicing and timely annuity issuance,” PFRDA said.
Steps To Follow For Paperless Exit
According to the circular released by PFRDA, the following steps need to be followed for the paperless mode processing of exit requests by NPS subscribers (both government and non-government):
- The subscriber will begin the process of an online exit request by logging into the CRA system.
- When the request is initiated, the subscriber will be presented with relevant messages regarding e-sign/OTP authentication, authorisation of the request by the nodal office/PoP, and other related information.
- When initiating the request, information such, as address, bank details, nominee details, etc. will be automatically populated from the NPS account.
- The subscriber will have to choose the fund allocation percentage for lump sum and/or annuity, as well as provide annuity details, and other relevant information.
- It is mandatory for the subscriber to upload ‘know-your-customer’ (KYC) documents. i.e., identity and address proof, a copy of the PRAN card/ePRAN, as well as bank proof while submitting the exit request.
- The scanned documents must be of good quality, meaning that the scanned images should be clear and legible.
- The subscriber can authorise the request in a paperless manner by choosing any one of the two options given below:
- OTP Authentication - Separate OTPs will be sent to the mobile numbers and email IDs of the subscribers.
- e-Sign - Subscribers will sign the request using Aadhaar through the e-Sign method.
Exit Rules For NPS
At present, an NPS subscriber is required to utilise a minimum of 40 per cent of the total accumulated corpus to buy an annuity plan upon reaching maturity. The remaining 60 per cent of the NPS corpus can be withdrawn as a lump sum. If the total corpus is equal to or less than Rs 5 lakh, the subscriber has the option to withdraw the entire amount as a lump sum at maturity.
In the case of a premature exit before the age of 60, an NPS subscriber must utilise 80 per cent of the total NPS corpus to purchase a pension plan (annuity).