As the new financial year kicks in, here are some important changes in the personal finance space that senior citizens must know. These changes relate to the national pension system (NPS), mutual funds (MFs), and insurance, instruments vital to retirement planning.

Let’s explore the changes effective April 1. 

NPS Two-Factor Authentication (2FA):

The National Pension System (NPS) will implement two-factor authentication effective April 1, 2024. In a circular dated March 15, 2024, the Pension Funds Regulatory and Development Authority (PFRDA) made the two-factor authentication mandatory for NPS users and government and corporate nodal officials.

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Amid increased digital frauds and scams, this additional layer of security through Aadhaar-based OTP, login and passwords will provide subscribers with much-needed security against fraudsters. According to the PFRDA circular, “The integration of Aadhaar-based login authentication is a proactive step to fortify the overall authentication and login framework. This initiative is designed to create a secure environment for all NPS activities carried out by government offices and autonomous bodies.” In March, PFRDA issued a standard operating procedure (SOP) for nodal officers implementing the two-factor authentication (2FA). 

Mutual Funds:

Mutual fund investors must update their Know-Your-Customer (KYC) details by March 31, 2024, if their KYC details do not match the officially valid documents (OVD). If the KYC information is the same as OVD, like an Aadhaar card, voter ID, passport, etc., they will not require re-KYC. However, their mobile number and email ID should be updated and verified. If you are unsure of the documents to be updated, you may check with your broker or the asset management company with whom you have invested the money.

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E-Insurance:

Another important change, effective April 1, 2024, is e-insurance. As per the Insurance Regulatory and Development Authority of India (Irdai) notification in March 2024, the insurers must issue the policy documents in a digital form for all life, health, and general insurance policies. However, customers can also request a physical copy. The digitally issued policies will be kept in the e-insurance account or e-IA, where policyholders can access all their policies without the need to go and check emails or websites for policy details like earlier it used to be. Compulsory electronic issuance is useful as it removes the risk of losing physical policy documents and the need to record all the policies. Besides, the account will have all insurers’ details, making it easier for a policyholder to get information on all the policies in one place. Also, any changes made in the e-insurance account will apply to all policies. Another change is in the surrender value, which is returned to the policyholder in case of the policy’s premature closure. While there is no significant change in the surrender value norms, there is a marginal increase in the surrender value from the fourth year onwards.