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What happens to NPS annuity if subscriber dies after taking lumpsum?

What happens to NPS annuity if subscriber dies after taking lumpsum?

What happens to NPS annuity if subscriber dies after taking lumpsum?
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By Anshul  Oct 27, 2022 5:01:23 PM IST (Published)

National Pension System or NPS, a government-run investment scheme, gives the subscriber the option to set the preferred allocation to different asset classes. Here's a new clarification from PFRDA

The Pension Fund Regulatory and Development Authority (PFRDA) has issued guidelines on handling National Pension System (NPS) annuity if the subscriber dies after taking lumpsum. According to the pension regulator, it is observed that in certain cases, the subscribers post availing lump sum had

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met with unfortunate death but before issuance of annuity and the amount meant for annuity lie in the central record keeping agency (CRA) System.

However, PFRDA said that the annuity shall mandatorily be purchased by the spouse (if any) providing annuity for life of the spouse with provision for return of purchase price (ROP) in such cases.
"On demise the 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 the annuity, utilizing the purchase price required to be returned under the annuity contract until the family members in the order specified here are covered: living dependent mother of the deceased subscriber and living dependent father of the deceased subscriber," it said.
After the coverage of the family members specified above, the purchase price
or the amount which was to be utilized for purchase of annuity shall be returned to the surviving children of the subscriber and in the case of absence of children, to the other legal heir(s) of the subscriber, as the case may be, according to PFRDA.
In case of citizens and corporate subscribers, PFRDA said that the entire accumulated pension wealth will be paid to the nominees or legal heirs. However, the legal heirs or nominees if opted for can buy the annuity.
NPS Trust (NPST), POPs, Corporate and Nodal Officers can engage with all those claimants of those deceased Subscribers who have availed lump sum but not bought annuity as per the provisions mentioned above. NPS Trust is informed to monitor the progress and engage with the respective
nodal officers, subscribers, POPs, corporate and stakeholders in order to ensure all pending death claims processed in a timely manner, the circular said.
For the uninitiated, National Pension System or NPS, a government-run investment scheme, gives the subscriber the option to set the preferred allocation to different asset classes.
NPS offers two kinds of accounts — Tier 1 and Tier 2 — for instruments including government bonds, equity market, and corporate debt.
While the Tier 1 NPS account is strictly a pension account, the Tier 2 account — known as an investment account — is voluntary savings account associated with the Pension Regulatory Authority of India (PRAN).
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