Kolkata, Sep 9 (PTI) The Pension Fund Regulatory and Development Authority (PFRDA) has held preliminary discussions with the insurance regulator IRDAI on porting annuity policies for NPS subscribers as it will pave the way for switching pension schemes on an ongoing basis.
Currently, once the annuity product is selected it cannot be changed anymore.
“We have held discussions with IRDAI and also with the service providers to allow portability. It is in a preliminary stage of discussion,” PFRDA chairperson Supratim Bandyopadhyay said.
“The problem is once the annuity product is selected, it cannot be changed anymore except till the initial cooling-off period of 15-20 days. But it is found that many subscribers decide in a hurry and realise afterwards that another option was better and wish to rectify,” he said.
Porting between service providers during the fund accumulation stage is already in place.
PFRDA also aims to offer the flexibility after it found that returns on the annuities vary widely between the insurance companies. Recently, the annuity rate of return offered by insurers varies between 5.39 and 6.81 per cent.
“We also held some discussion on this aspect with IRDA,” the chief of PFRDA said.
At the time of superannuation, an NPS subscriber has to mandatorily put a part of the retirement corpus into annuities depending upon the scheme. The minimum annuity purchase for central government employees is 40 per cent of the accumulated corpus.
A total 14 insurance companies have partnered with PFRDA to offer annuity services. This includes LIC, SBI, HDFC and a host of other private life insurance companies.
In the accumulation stage there were a total seven insurance companies and recently three more had been given licenses taking the total number to 10.
Bandyopadhyay said realising the need for awareness among the users about purchasing annuities it has commenced holding interactive sessions with subscribers involving the insurance companies and will distribute booklets to educate.
About four lakh NPS subscribers will be retiring in the next five years, he said.
Currently there are 5.8 crore accounts including four crore Atal Pension scheme. Currently the total corpus under PFRDA is Rs 8 lakh crore as on September 5. PTI BSM MR MR
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