Retirees can now opt to continue with 'default' investment plan under NPS
New Delhi, October 10, 2022
After the new rule kicks in, retirees will be able to choose to continue with the existing plan or choose a new PFM and investment plan
The subscribers of the National Pension Scheme (NPS) can now continue with their existing 'default' investment pattern and pension fund manager (PFM) even after retirement. The Pension Fund Regulatory and Development Authority (PFRDA) said, according to a report by BusinessLine (BL), that retirees not be required to file a request in this regard.
Until now, retirees could not contribute to their NPS account after retirement. They had to submit a separate request for the same. After the new rule, they can choose to continue with the existing plan or choose a new PFM and investment plan.
The move will come as a relief to over 30,000 government employees.
Under the 'default' investment plan, the NPC contributions are invested in equities with a cap of 15 per cent. The rest is invested in government securities and corporate bonds.
Several employees had approached PFRDA to express their willingness to continue the 'default' pattern and PFMs. The government provides three PFMs to the employees namely, LIC Pension Fund, SBI Pension Fund and UTI Pension Fund.
However, given the high average returns of up to 7-8 per cent, pensioners were vary of choosing a new investment model.
Recently, PFRDA proposed a process to allow lumpsum withdrawals of the NPS through a systematic lump sum withdrawals (SLW) facility through automation. The withdrawal was allowed monthly, quarterly, half-yearly and annually till the beneficiary attains 75 years of age.
Currently, the sum can be withdrawn as a single tranche or on annual basis.
[The Business Standard]