The Pension Fund Regulatory & Development Authority (PFRDA) has announced that the subscribers of the National Pension System (NPS) can select their Annuity Service Providers (ASPs) without any extra cost upon exit from NPS. The subscribers also need not pay intermediation expenses when buying the annuity from any empanelled ASP.
In a July 27, 2023 circular, PFRDA clarified that NPS subscribers could select the annuity scheme and the ASP based on their preferences and requirement. The move aims at empowering them to exercise the right to choose and improve the ease of the system.
PFRDA said the nodal officers of the National Pension System Trust (NPST) and the Point of Presence (POPs) would create awareness and help them select ASPs as per their needs for a smooth transition into their retirement phase. It said the subscribers could seek guidance from the nodal officers regarding the annuity plans.
Charges And Fees:
The charges and the fees levied by the ASP on subscribers will be as per the exit regulations, and no extra charges except for the premium for the annuity product approved by IRDAI. “However, any taxes or other levies payable to the Government, or any charges by the regulator are excluded from this limitation,” the circular said.
There will be no other charges for the annuity products issued to the subscribers. It is to avoid sourcing an agency or intermediary by the ASPs. Thus, the annuities from the NPS, as per the circular, will be issued ‘under direct channel’.
The compliance officer will be responsible for compliance by the ASPs. The officer will monitor ASPs for compliance laid down by the authority under the “Exit Regulations and Circulars” and other laws. The officer will then give the compliance certificate to the authority.
In case of any grievances reported by the subscribers after exiting from the NPS, the compliance officer and the ASP, who sold annuities to the subscriber, will address such grievances and take necessary steps.
The ASPs must adhere to the guidelines and “ensure compliance”, effective September 1, 2023. Besides, PFRDA has asked the nodal officers, the PoP, and NPST to inform the subscribers about the circular.