India's insurance and pension regulators are finalising a strategy to streamline the process for payouts under the National Pension System (NPS), including online purchases of annuities, easier KYC norms and a simplified form.
Sources said officials from the IRDAI and Pension Fund Regulator and Development Authority (PFRDA), along with executives of insurance companies, which work as annuity service providers to the NPS, met last week to discuss the proposal as well as address the problem of delay and suggest possible solutions, reports The Hindu Business Line.
“The purchase of an annuity is mandatory under the NPS. We are working on an online system where, once a person retires, he or she can place an online request with the NPS to buy an annuity and this can be forwarded to the annuity service provider of choice,” said Mr Hemant Contractor, PFRDA chairman.
Delayed annuity plans
While Mr Contractor did not comment on the number of annuities the issuance of which has been delayed, sources said about 6,000 to 7,000 annuities are yet to be issued.
“The delay in issuance of annuities was just one of the issues discussed at the meeting. There are only a few such cases,” said Mr Contractor.
Sources said that the new process for the issuance of an annuity will start at least three months in advance to ensure that all details, including address, phone number and bank account details, are up to date.
NSDL, the central record-keeping agency for the NPS, will be roped in for this.
“The problem is that often the subscriber, on retirement, moves to his village or ancestral place, making it difficult to trace him or her,” noted the source.
The regulators have also come to an agreement to use the know-your customer (KYC) done by the IRDAI for the payout, rather than one done by both.
Further, a new form will also be issued to the customer to fill in details.
At present, there are five empanelled annuity service providers — Life Insurance Corporation of India, HDFC Standard Life Insurance, ICICI Prudential Life Insurance, SBI Life Insurance and Star Union Daichi Life Insurance.