NPS Annuities: How to Earn Regular Pension After Age of 60
- by Satakshi-Gauri
- Jul 11, 2020 17:42
NPS subscribers have to mandatorily opt for an annuity scheme at the time of exit. They have to opt for an annuity service provider (ASP) at the time of retirement or premature exit from the scheme. The annuity under the National Pension Scheme refers to the regular payment to the NPS subscriber after her exit from the scheme. These regular payments are provided by an IRDA registered insurance company called an annuity service provider. If an NPS subscriber retires at the age of 60, she has to compulsorily buy an annuity plan for 40% of the total corpus. She can withdraw up to 60% in a lump sum.
However, if a subscriber chooses to make a premature exit, she will have to buy a compulsory annuity for 80% of the total corpus. She can withdraw 20% in a lump sum. Currently, there are seven ASPs impaneled with PFRDA to provide annuity services to the NPS subscribers. They are Life Insurance Corporation of India, SBI Life Insurance, ICICI Prudential Life Insurance, HDFC Standard Life Insurance, Bajaj Allianz Life Insurance, Reliance Life Insurance, and Star Union Dai-ichi Life Insurance Co. Ltd. LIC is the default ASP in case the subscriber does not choose one. The minimum age to receive annuity is predefined by each ASP. Like, HDFC Standard Life and LIC allow annuity from the age of 30 while SBI Life offers the annuity only after the subscriber reaches 40 years of age.
A subscriber can choose from different annuity options provided by the ASPs as below:
1. Annuity payable for life at a uniform rate to the annuitant. An annuitant is a person who receives an annuity.
2. Annuity payable for 5, 10, 15, or 20 years certain and thereafter as long as the annuitant is alive.
3. Annuity for life with return of purchase price on death of the annuitant.
4. Annuity payable for life increasing at a simple rate of 3% per annum.
5. Annuity for life with a provision of 50% of the annuity payable to spouse during his/her lifetime on death of the annuitant.
6. Annuity for life with a provision of 100% of the annuity payable to spouse during his/her lifetime on death of the annuitant.
7. Annuity for life with a provision of 100% of the annuity payable to the spouse during his/ her lifetime on death of annuitant. The purchase price will be returned on the death of the last survivor.
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