NPS rule change: Uploading these documents will be mandatory for withdrawal from April 1, 2023

NPS rule change: Uploading these documents will be mandatory for withdrawal from April 1, 2023

In a bid to make annuity payments faster and simpler after exiting the National Pension System (NPS), Pension Fund Regulatory and Development Authority (PFRDA) has made uploading select documents mandatory for the subscribers from April 1, 2023. “In the interest of Subscribers and to benefit them with the timely payment of annuity income, the upload of the documents shall be mandatory with effect from 1st April 2023,” the pension body said in a circular dated February 22, 2023.

What changes for NPS subscribers
The PFRDA has asked the subscribers and the associated nodal officers/POPs/corporate to ensure that the following documents are uploaded to the respective Central Record Keeping Agency (CRA) user interface. The 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) card

When will this new NPS rule come into effect?
Uploading documents will be mandatory for the withdrawal of pension corpus from April 1, 2023.

“All nodal offices/ POPs/corporate can educate the associated subscribers about the importance of upload of documents and perform suitable quality checks about the legibility of those documents,” the PFRDA said.

Here are the steps for processing of exit request by NPS subscriber (government or non government) – paperless mode, as per PFRDA circular
a) The subscriber will initiate an online exit request by logging into the CRA system.
b) At the time of initiation of request, the relevant messages about e-Sign/OTP authentication, authorisation of request by nodal office/POP, etc. displayed to the subscriber.
c) During request initiation, details like address, bank details, nominee details, etc. will be auto-populated from the NPS account.
d) Subscriber will select fund allocation percentage for lump sum/annuity, annuity details, etc.
e) The bank Account of the subscriber (registered in CRA) will be verified through online bank account verification (penny drop facility).
f) Subscriber needs to mandatorily upload KYC Documents (identity & address proof), copy of PRAN card/ePRAN, and bank Proof at the time of submitting exit request.
g) Scanned documents should be appropriate i.e. scanned images should be legible.
h) Subscriber authorizes the request by using any one of the two following options to
make the process paperless:
1) OTP Authentication – Distinct OTPs will be sent to mobile numbers and email IDs of the subscribers.
2) e-Sign – Subscribers will e-Sign the request using Aadhaar

To ease NPS withdrawal process for subscribers
Earlier last year, the pension body said that the NPS subscribers do not need to fill out a separate proposal form to choose the annuity after exiting the pension corpus. The exit form submitted by the NPS subscribers would be treated as an annuity proposal form, the pension body said.

“The common proposal for Exit from NPS and for buying the annuity from 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 noticed.

NPS exit rule
At present, an NPS subscriber must utilise at least 40 per cent of the total accumulated corpus to purchase an annuity plan at the time of maturity. The remaining 60 per cent of the NPS corpus can be withdrawn as a lump sum. If the total corpus is less than or equal to Rs 5 lakh, the subscriber will have an option of complete lump sum withdrawal at maturity. For premature exit before the age of 60, an NPS subscriber needs to use 80 per cent of the total NPS corpus to buy a pension plan (annuity) from a life insurance company.

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Author: Shirley