Pension Fund Regulatory and Development Authority (Exits and Withdrawals under the National Pension System) (Amendment) Regulations, 2021

On June 14, 2021, the Pension Fund regulatory and Development Authority (PFRDA) issued the Pension Fund Regulatory and Development Authority (Exits and Withdrawals under the National Pension System) (Amendment) Regulations, 2021 to further amend the Pension Fund Regulatory and Development Authority (Exits and Withdrawals under the National Pension System) Regulations, 2015.

The following amendments have been made:

 

The sub clause (ii) and (iii) of Section 2(k) has been substituted with the mentioned below. Section 2(k) provides the definition of Exit” as closure of individual pension account of the subscriber under National Pension System, upon and on the date of happening of any of the following events, as may be applicable. Sub clause (ii) as per the amendment states:

 

a subscriber having attained the age of sixty years, and where so specifically permitted has not exercised a choice in writing to continue to remain subscribed to such system, till such further period as is permissible, with or without making contributions or in respect of a subscriber who has joined National Pension System after attaining the age of sixty years (but before attaining seventy years of age) upon attaining the maximum age permitted to be subscribed to such scheme or any date prior thereto, based on the specific request for closure received from subscriber;

death of the subscriber before attaining the age of superannuation, or the age of sixty years, or in cases where an option has been exercised by subscriber to continue to remain subscribed to a certain permissible time period, death before expiry of such period or death of a subscriber who has joined National Pension System after attaining the age of sixty years (but before attaining seventy years of age) at any time prior to attaining the maximum age permitted to be subscribed to such scheme;

• Regulation 3 dealing with Exit from National Pension System for government sector subscribers has been modified. The modifications are mentioned below:

  1. Sub-regulation (a) (i) of Regulation 3 shall be substituted as below: –

the following shall be the default annuity contract that will be applicable and wherein the annuity contract shall provide for annuity for life of the subscriber and his or her spouse (if any) with provision for return of purchase price of the annuity and on the demise of such subscriber and his or her spouse, the annuity be re-issued to the family members in the order specified hereunder, at the rate of premium prevalent at the time of purchase of such annuity by utilizing the purchase price required to be returned under the annuity contract (until the family members in the order specified below are covered) :

(a) living dependent mother of the deceased subscriber;

(b) living dependent father of the deceased subscriber.

After the coverage of the family members specified above, the purchase price or the amount which was to be utilised for purchase of annuity shall be returned to the surviving children of the subscriber and in absence of children to the legal heir(s) of the subscriber, as the case may be;

In the absence of or non-availability of such a default annuity for any reason, the subscriber shall be required to exercise the option for purchase of such annuity of his choice, within the then annuity types or contracts made available by the annuity service providers empanelled by the Authority;

Further, a subscriber who wishes to opt out of the default option mentioned above and wishes to choose the annuity contract of his choice from the available annuity types or contracts with the annuity service providers, shall be required to specifically opt for such an option:

2. Sub-regulation (a) (iii) of Regulation 3 shall be substituted as below: –

where the subscriber desires to defer the purchase of annuity, he or she shall have the option to do so for a maximum period of three years from the date of attainment of age of superannuation, provided the subscriber intimates his or her intention to do so in writing in the specified form or in any other manner approved by the Authority, at least fifteen days prior to the attainment of age of superannuation, to the Central recordkeeping agency or National Pension System Trust or an intermediary or entity authorized by the Authority for this purpose. It shall be a condition precedent to opt for such deferment of annuity purchase, that in case if the death of the subscriber occurs before such due date of purchase of an annuity after the deferment, the annuity shall mandatorily be purchased by the spouse(if any) providing for annuity for life of the spouse with provision for return of purchase price of the annuity and upon the demise of such spouse, be re-issued to the family members in the order of preference provided hereunder, at the rate of premium prevalent at the time of purchase of the annuity, utilizing the purchase price required to be returned under the contract ( until the family members in the order specified below are covered):-

(a) living dependent mother of the deceased subscriber;

(b) living dependent father of the deceased subscriber.

After the coverage of the family members specified above, the purchase price or the amount which was to be utilised for purchase of annuity shall be returned to the surviving children of the subscriber and in absence of children to the legal heir(s) of the subscriber as the case may be;

3. Sub-regulation (a)(v) of Regulation 3 shall be substituted as below: –

where the accumulated pension wealth in the Permanent Retirement Account of the subscriber is equal to or less than a sum of five lakh rupees, or a limit as specified by the Authority, the subscriber shall have the option to withdraw the entire accumulated pension wealth without purchasing annuity and upon such exercise of this option, the right of such subscriber to receive any pension or other amount under the National Pension System or from the government or employer, shall extinguish;

4. Sub-regulation (a) (vi) of Regulation 3 shall be substituted as below: –

where the subscriber desires to continue in the National Pension System and contribute to his retirement account beyond the age of sixty years or the age of superannuation, he or she shall have the option to do so by giving in writing or in such form as may be specified, and up to which he would like to contribute to his individual pension account but not exceeding seventy years of age. Such option shall be exercised at least fifteen days prior to the age of attaining sixty years or age of superannuation, as the case may be to the central record keeping agency or the National Pension System Trust or any other intermediary or entity authorized by the Authority for the purpose. In such cases, individual pension account/ Permanent Retirement Account shall require to be shifted from Government sector to All citizens including corporate sector and the expenses, maintenance charges and fee payable under the National Pension System in respect of the said individual pension account/ Permanent Retirement Account, shall continue to remain applicable:

5. Proviso 2 of sub-regulation (b) of Regulation 3 shall be substituted as below: –

Provided that if the accumulated pension wealth of the subscriber is more than two lakh fifty thousand rupees or a limit to be specified by the Authority for the purpose but the age of the subscriber is less than the minimum age required for purchasing any annuity from any of the empanelled annuity service providers as chosen by such subscriber, such subscriber shall continue to be subscribed to the National Pension System, until he or she attains the age of eligibility for purchase of any annuity:

6. Proviso 3 of sub-regulation (b) of Regulation 3 shall be substituted as below: –

Provided further that if the accumulated pension wealth of the subscriber is equal to or less than two lakh fifty thousand rupees or a limit to be specified by the Authority, such subscriber shall have the option to withdraw the entire accumulated pension wealth without purchasing any annuity and upon such exercise of this option the right of the subscriber to receive any pension or other amounts under the National Pension System shall extinguish and any such exercise of this option by the subscriber, before the notification of this provision, shall be deemed to have been made in accordance with this regulation;

7. Sub-regulation (c)(i) of Regulation 3 shall be substituted as below: –

such annuity contract shall provide for annuity for life of the spouse of the subscriber (if any) with provision for return of purchase price of the annuity and upon the demise of such spouse be re-issued to the family members in the order specified hereunder at the rate of premium prevalent at the time of purchase of the annuity, utilizing the purchase price required to be returned under the contract (until the family members in the order specified below are covered):-

(a) living dependent mother of the deceased subscriber;

(b) living dependent father of the deceased subscriber.

After the coverage of the family members specified above, the purchase price or the amount which was to be utilised for purchase of annuity shall be returned to the surviving children of the subscriber and in absence of children, the legal heir(s) of the subscriber as the case may be. In the absence of or non-availability of such a default annuity for any reason, the family member of the deceased subscriber shall be required to exercise the option for purchase of such annuity of his choice, within the then annuity types or contracts made available by the annuity service providers empanelled by the Authority;

8. Sub-regulation (c)(ii) of Regulation 3 shall be substituted as below: –

Provided further that if the accumulated pension wealth in the permanent retirement account of the subscriber at the time of his death is equal to or less than Five lakh rupees or a limit to be specified by the Authority, the nominee or legal heir(s) as the case may be, shall have the option to withdraw the entire accumulated pension wealth without requiring to purchase any annuity and upon such exercise of this option the right of the family members to receive any pension or other amounts under the National Pension System shall extinguish.

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