The insurance regulator Insurance Regulatory and Development Authority (IRDAI) has eased the requirement of submitting separate proposal forms by senior citizens for taking immediate annuity products from the proceeds of National Pension Scheme (NPS). Henceforth, the exit form of NPS will be treated as a proposal form for purchasing annuity products.
Under the NPS, a subscriber who superannuates is required to purchase an immediate annuity (excluding the commuted value) from any life insurance company.
Currently, insurance companies collect proposals form NPS retirees to offer immediate annuity products. The Pension Fund Regulatory and Development Authority of India (PFRDA) also collects exhaustive exit forms from the NPS retirees which captures necessary details which insurance companies require in the proposal form.
Given the duplication and to facilitate ease of doing business and on-boarding NPS retirees for immediate annuity products, the regulator has said that the exit form of NPS will be treated as a proposal form for purchasing annuity, thereby reducing the time and efforts of senior citizens as well as insurers.
“In order to increase the adoption of technology, insurers have been advised to adopt Adhaar based authentication for verification of life certificates, such as Jeevan Pramaan, a Government of India initiative on biometric enabled digital service,” said IRDAI.
“Since under annuity policies, the annuity amount is payable only as long as the annuitant survives, life insurance companies take an annual “survival certificate” from the annuitant. IRDAI has now clarified that the signature to the “survival certificate” can be taken through biometric based digital means. Both the above clarifications are welcome steps intended to facilitate ease of servicing annuity policies purchased by annuitants,” said Conjeevaram Baradhwaj, executive vice president, Future Generali India Life Insurance.
It is also learnt that PFRDA has held preliminary discussions with the 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 any more except in 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.
Porting between service providers during the fund accumulation stage is already in place.