NPS Death Claim: Video-Based Verification Allowed For Legal Heir or Nominee

Pension regulator at the node The Pension Fund Regulatory and Development Authority (PFRDA) has stated that in the event of the death of an NPS (National Pension System) subscriber, intermediaries may use a video-based customer identification process (VCIP).

It should be noted that the PFRDA (Exits & Withdrawals under NPS) Regulations 2015 and amendments clearly state that in the event of a subscriber's death, the subscriber's total accrued pension wealth (100 percent NPS Corpus) shall be distributed to the nominees or legal heirs as applicable.

A legal heir or nominee can make an NPS claim by submitting a fully completed death withdrawal form along with supporting documentation, such as the subscriber's death certificate, KYC documents, and bank account information.

In a circular issued on January 4, 2023, the PFRDA stated that video verification has been added as an additional layer to verify the nominee, claimant, and legal heir while clearing withdrawal claims in the event of the sudden death of pension investors. The credentials of the nominee can be verified using Aadhaar e-KYC.

In order to ensure seamless exit claim processing and to keep up with technological advancements, it has been decided to allow intermediaries to use VCIP as an additional due diligence mechanism for verification of the nominee/claimant/legal heir while processing withdrawal claims in the event of the death of NPS subscribers."

The regulator stated that it has received representations from intermediaries requesting that VCIP be used to expedite the processing of withdrawal claims.

Earlier in 2020, the nodal pension agency authorised intermediaries to use the Video Based Customer Identification Process (VCIP) for any NPS-related services, including onboarding and exit, in a circular dated October 6, 2020.

How can the credentials of the nominee be verified?

According to the PFRDA, the nodal agency will keep a video record of the transaction of the person who submits the documentation for processing the claim during the verification process of the nominee/claimant/legal heir.

The nominee's information will then be verified using Aadhaar e-KYC or DigiLocker.

In its most recent circular, the PFRDA stated that video verification is an option and that it prefers Point-of-Presence (PoP), particularly online PoPs, to use emerging technology for enhanced due diligence and error-free/timely claim processing.

For the benefit of customers, the agency has added that, in addition to intermediaries registered with PFRDA, those registered with other financial sector regulators are also permitted to follow the VCIP guidelines for NPS-related activities.