The Pension Fund Regulatory and Development Authority (PFRDA) on May 10, 2023 released a circular announcing a change to the National Pension System (NPS). It will now allow NPS subscribers to choose from multiple annuity schemes from the same annuity service provider (ASP) at the time of exit. This change is being made to optimise subscribers’ retirement income and to provide them with a wider range of annuity options.
Current Annuity Scheme Option: Under the current regulations, NPS subscribers are allowed to buy one annuity scheme from the ASP at the time of exit. However, with the new change, subscribers will be able to choose from multiple annuity schemes from the same ASP if they earmark an annuity corpus of more than Rs 10 lakh, with Rs 5 lakh utilised to buy each annuity scheme.
Benefits Of Multiple Annuities: PFRDA believes that the option for multiple annuities will greatly benefit subscribers by providing them with a wider range of annuity options and optimising their retirement income. This change will give subscribers more flexibility in choosing annuity schemes that align with their retirement needs and preferences.
Implementation Of The Change: The circular advises the central recordkeeping agencies (CRAs) to build the necessary system-level functionality to facilitate the implementation of this change. Until this feature is developed, ASPs can handle the requests for multiple annuities received from subscribers and provide the necessary information to CRA through reverse information flow (RIF).
WHAT DOES IT MEAN FOR YOU?
With the option for multiple annuities, subscribers will have more control over their retirement income, thus making it easier to manage their finances during retirement.
According to experts, The PFRDA’s decision to provide multiple annuity options under NPS is a positive move toward making retirement planning more accessible and flexible for subscribers.
This could potentially increase the number of subscribers and, in turn, boost the overall retirement savings in the country.
Given that the implementation of this change is still in progress, subscribers should stay informed about the latest developments and consult with their ASPs or financial advisors to make the most of this new feature.