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LATEST NEWS UPDATES | No annuity rider, NPS subscribers get ₹5 lakh exit option

No annuity rider, NPS subscribers get ₹5 lakh exit option

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published Published on Apr 15, 2021   modified Modified on Apr 16, 2021

-The Hindu

Admitting that annuities now fetch paltry pensions, regulator says investors can withdraw the corpus

The National Pension System (NPS) will no longer compel investors to convert 40% of their accumulated retirement corpus into an annuity, as poor yields on annuities and high inflation are translating into negative returns, the Pension Fund Regulatory and Development Authority (PFRDA) Chairman, Supratim Bandyopadhyay, said on Thursday.

The regulator will issue fresh rules to soon allow those saving up to 5 lakh in the NPS to take the whole amount at retirement, up from 2 lakh at present. The pension fund regulator is also hoping to launch the first guaranteed return NPS scheme in the coming year.

Separately, amendments will be made to the PFRDA Act of 2013 to allow NPS members with a balance over 5 lakh to retain 40% of the corpus in the NPS or wind it down over a few years through a system akin to a systematic withdrawal plan.

“Post-retirement, a person has to take 40% of the total corpus as an annuity as per the law’s mandate, and 60% can be commuted and taken as a lump sum. But the annuity rates always track the interest rates in the market which have come down drastically. So much so, if someone opts for a lifetime annuity at retirement with a return of purchase price to the nominee when the person dies, the rates are varying between 5% and 5.5%,” he pointed out.

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The Hindu, 15 April, 2021, https://www.thehindu.com/news/national/no-annuity-rider-nps-subscribers-get-5-lakh-exit-option/article34329942.ece?homepage=true


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