New NPS Rule: Uploading these documents will be mandatory from April 1, 2023

According to the Pension Fund Regulatory and Development Authority (PFRDA), uploading certain documents will be required for NPS subscribers who want to exit and receive timely annuity payments beginning April 1, 2023. In an effort to speed up and simplify annuity payments after exiting NPS, the Pension Fund Regulatory and Development Authority (PFRDA) has made uploading a few specific papers mandatory for subscribers starting April 1, 2023.

Mandatory documents

The PFRDA has asked that the following papers be submitted by subscribers and connected nodal officers/POPs/corporate to the appropriate Central Record Keeping Agency (CRA) user interface.The following documents must be uploaded:

• NPS Exit/ Withdrawal Form
• Proof of Identity
• Proof of Address
• Bank account Proof
• Copy of PRAN card

According to the regulator, the common proposal for exiting NPS and purchasing annuities from ASPs allows for parallel processing of the lump sum component and annuity, which reduces the time required by ASPs to issue annuity policies.
Under NPS rules, ASPs are Life Insurance Companies regulated by IRDAI and authorised by the PFRDA to serve NPS Subscribers and provide them with a regular stream of periodic income in their old age.

Steps for processing of exit request by NPS subscriber

The subscriber will log into the CRA system and initiate an online exit request.
At the time of request initiation, the relevant messages about e-Sign/OTP authentication, request authorization by nodal office/POP, and so on are displayed to the subscriber.
When a request is initiated, details such as address, bank information, nominee information, and so on will be auto-populated from the NPS account.
The subscriber will select the fund allocation percentage for the lump sum/annuity, as well as the annuity details, among other things.
The subscriber's bank account (registered in CRA) will be verified via online bank account verification (penny drop facility).
When submitting an exit request, the subscriber must upload KYC documents (identity and address proof), a copy of the PRAN card/ePRAN, and bank proof.

Scanned documents must be appropriate, which means that scanned images must be legible.

The subscriber authorises the request by selecting one of the two paperless options listed below:
1) OTP Authentication - Unique OTPs will be sent to subscribers' mobile phone numbers and email addresses.
2) e-Sign - The National Pension System (NPS) provides citizens with affordable social security. Employees and employers both contribute to this low-cost, tax-efficient plan.

The pension body stated earlier this year that NPS subscribers do not need to fill out a separate proposal form to choose an annuity after exiting the pension corpus. According to the pension body, the exit form submitted by NPS subscribers will be treated as an annuity proposal form.

The common proposal for exiting NPS and purchasing an annuity from an ASP allows for parallel processing of the lump sum component and the annuity, which reduces the time taken by ASPs to issue annuity policies, resulting in faster subscriber servicing and timely annuity issuance, according to PFRDA.

At the moment, an NPS subscriber must use at least 40% of the total accumulated corpus to purchase an annuity plan when it matures.You can withdraw the remaining 60% of the NPS corpus in one lump amount. The subscriber would be permitted to withdraw the full corpus at maturity if the total corpus is Rs 5 lakh or less. An NPS subscriber who wishes to leave the NPS before turning 60 must acquire a pension plan (annuity) from a life insurance firm with 80% of the NPS corpus.