Selection of Annuity Service Provider and Prohibition of Additional Charges
PFRDA circular PFRDA/2023/14/SUP-ASP /03 · 27 Jul 2023
Official title
Selection of ASP to be exercised by Subscribers upon exit from NPS
PFRDA circular PFRDA/2023/14/SUP-ASP /03 · 27 Jul 2023
Official title
Selection of ASP to be exercised by Subscribers upon exit from NPS
Summary
Check the official recordThis circular clarifies that National Pension System (NPS) subscribers have the individual right to select their preferred Annuity Service Provider (ASP) and annuity scheme upon exit. To ensure transparency and compliance, ASPs are prohibited from levying any additional fees, charges, or intermediation expenses beyond the premium rates approved by the Insurance Regulatory and Development Authority of India (IRDAI). Annuities must be issued through a direct channel, and the deployment of agencies or intermediaries for sourcing is forbidden. ASPs are required to ensure compliance, address subscriber grievances, and submit a compliance certificate. These requirements will be integrated into the half-yearly supervisory compliance reports for ASPs starting from September 1, 2023.
What you must do
Key dates
Who is affected
Exceptions
[Image omitted. See the official document.]
PENSION FUND REGULATORY AND DEVELOPMENT AUTHORITY
CIRCULAR
No: PFRDA/2023/14/SUP-ASP /03
27th July, 2023
To, All NPS Stake holders & ASPs
Subject: Clarification that selection of Annuity Service Provider (ASP) is the individual choice to be exercised by Subscribers upon exit from NPS and no Additional Charges or Intermediation Expenses are payable by subscribers under NPS, while opting for or purchasing annuity from any empanelled ASP.
This circular is issued in exercise of powers conferred under section 14 (1) and section 20(2) (h) and (i) of The Pension Fund Regulatory & Development Authority Act, 2013 and Regulation 3 of the PFRDA (Exits and Withdrawals from National Pension system) Regulations, 2015.
At the time of exit from NPS, an individual subscriber in terms of Section 20(2)(h) and Regulation of the PFRDA (Exits and Withdrawals from National Pension system) Regulations, 2015 (Exit Regulations) is mandatorily required to purchase an annuity that provides a monthly or periodical annuity (pension), as specified in the said regulations from an ASP empanelled with the Authority, In certain situation, limited exemption has been allowed by the Authority, from requirement of purchase of an annuity.
Subscribers are empowered to choose ASP as per their Choice:
a. NPS Subscribers are entitled to exercise their individual choice when selecting an Annuity scheme and ASP, based on their individual requirements and specific needs.
b. To ensure a seamless transition into the post-retirement phase, nodal officers under the Government sector, Point of Presence (POPs), and National Pension System Trust (NPST) are required to assist subscriber(s) in making informed decisions, based on their requirements, on the choice of the ASP and the Annuity Scheme as per their individual needs and providing necessary guidance throughout the process.
c. By empowering subscribers to exercise their individual choice in selecting the Annuity scheme and ASP, the aim is to optimize the retirement planning experience, enhance overall satisfaction for NPS Subscriber(s) and be compliant of the law.
Fees and Charges: The fees and charges levied on subscribers by ASP in respect of provision of Annuity shall be in adherence to the Exit regulations. In this regard, There shall be no additional fees or charges on the subscriber(s) other than the premium approved by the Insurance Regulatory and Development Authority of India (IRDAI) for the annuity product.
However, any taxes or other levies payable to the Government, or any charges by the regulator are excluded from this limitation. Additionally, there should be no additional intermediation expense or charge in respect of the annuity product issued to the subscribers and hence ASP can deploy no agency or intermediary for sourcing Annuity from NPS Subscribers. The annuities under NPS are to be issued under direct channel.
ASPs to take notice of the stipulations aforementioned and ensure compliances as are required. These shall form part of and be included in the half-yearly supervisory compliance of ASPs effective from 1st Sep 2023.
Besides compliance by ASPs, the circular is also for the information of nodal officers under the Government sector, Point of Presence (POPs), and National Pension System Trust (NPST) who shall bring it to the notice of subscribers.
This circular is available at www.pfrda.org.in under the Regulatory Framework > Circular tab.
Digitally signed by K MOHAN GANDHI Chief General Manager
Annexure
Subject: Compliance Certificate by ASP on Fees, Charges & Intermediation
We, [ASP Name], hereby certify that we are in full compliance with the regulations and guidelines set forth by the PFRDA regarding fees and charges levied on subscribers in relation to annuity products issued through the NPS.
As an Annuity Service Provider, we confirm the following compliance measures:
A. Premium (Purchase Price): We ensure that the fees and charges imposed on subscribers for annuity products strictly adhere to the premium rates approved by the IRDAI. There are no hidden or additional fees or charges imposed.
B. Exclusion of Government Taxes: Any tax imposed by the Government are excluded from the fee limitations. We do not charge any taxes to subscribers beyond the amounts determined by the Government.
C. No Additional Intermediation Expenses: We confirm that there are no additional intermediation expenses or charges levied on subscribers for the annuity products. We do not deploy any agency or intermediary for the purpose of sourcing annuities from NPS subscribers and annuity issued to NPS Subscribers under direct channel.
D. Compliance Officer Responsibilities: We diligently monitor and ensures compliance with all duties and responsibilities outlined in the PFRDA (Exits and Withdrawals from NPS) Regulations, 2015, besides addressing grievances reported by subscribers who have purchased annuities from us] upon exit from the NPS.
We are committed to upholding the highest standards of transparency, fairness, and regulatory compliance in our operations as an ASP and as specified under the provisions of exit regulations of PFRDA. The statements contained in this compliance certificate as true and correct to the best of my knowledge and nothing material has been omitted to be disclosed.
Name of Compliance officer & Signature
परिपत्र
परिपत्र संख्या : पीएफआिडीए/2023/14/एसयूपी- एएसपी /03
जुलाई 27, 2023
प्रति, सभी एनपीएस हितधारक और एएसपी
विषय : एनपीएस से निकास के दौरान अभिदाताओं की व्यक्तिगत पसंद पर वार्षिकी सेवा प्रदाता (एएसपी) के चुनाव और एनपीएस अभिदाताओं द्वारा किसी भी सूचीबद्ध एएसपी से वार्षिकी का चयन करते समय या खरीदते समय कोई अतिरिक्त प्रभार या मध्यस्थता खर्च देय न होने के सम्बन्ध में स्पष्टीकरण ।
यह परिपत्र पेंशन निधि विनियामक और विकास प्राधिकरण अधिनियम, 2013 की धारा 14 (1) और धारा 20 (2) (एच) और (आई) तथा पीएफआरडीए (राष्ट्रीय पेंशन प्रणाली से निकास और प्रत्याहरण) विनियम, 2015 के विनियमन 3 के तहत प्रदत्त शक्तियों का प्रयोग करते हुए जारी किया गया है।
एनपीएस से निकास के समय, पीएफआरडीए (राष्ट्रीय पेंशन प्रणाली से निकास और प्रत्याहरण) विनियम, 2015 (निकास विनियम) की धारा 20 (2) (एच) और विनियम के संदर्भ में किसी व्यक्तिगत अभिदाता द्वारा अनिवार्य रूप से एक वार्षिकी खरीदा जाना आवश्यक है जो प्राधिकरण के साथ सूचीबद्ध एएसपी से उक्त विनियमों में निर्दिष्ट मासिक या आवधिक वार्षिकी (पेंशन) प्रदान करता है। कुछ निश्चित स्थितियों में, प्राधिकरण द्वारा वार्षिकी की खरीद की आवश्यकता से सीमित छूट की अनुमति दी गई है।
अभिदाताओं को अपनी पसंद के अनुसार एएसपी चुनने का अधिकार है: