NPS becomes mature when the subscriber turns 60 years of age. He gets 60 percent of the total fund in lump sum. The remaining 40 percent of the money has to be used to buy annuity. He gets pension every month from this annuity.
On maturity of the National Pension System (NPS), it is necessary to use 40 percent of the total fund to buy an annuity plan. The remaining 60 percent money is given to the subscriber in lump sum which is tax-free. If the subscriber wishes, he can use more funds to buy annuity. From this annuity plan the subscriber gets pension every month. What are the rules for buying annuity, where can it be bought, how many annuity options are available? Let us try to know the answers to these questions.
NPS becomes mature when the subscriber turns 60. After that he has to buy annuity from annuity service providers. The list of Pension Fund Regulatory and Development Authority (PFRDA) includes 15 annuity service providers. There are a total of five main options available for annuity.
1. Annuity for Life with ROP (Return on purchase Price)
In this option the subscriber will get pension for his entire life. The pension will stop upon his death. The entire amount used to purchase the annuity will be returned to the nominee.
2. Joint Life Annuity with ROP
In this, pension will continue till the subscriber is alive. After his death his wife/husband will continue to receive pension. The pension will stop after the death of the wife/husband. The entire money used to purchase the annuity will be returned to the nominee.
3. Family Income with ROP
In this option the subscriber will get pension throughout his life. After his death, the pension will go to his wife/husband. After the death of the wife/husband, the pension will be given to the dependent mother and thereafter to the dependent father of the subscriber. The pension will stop after the death of the last person receiving the pension. The entire money used to purchase the annuity will then be passed on to the subscriber’s children or legal heirs.
4. Annuity for life without ROP
In this option the subscriber will get pension for his entire life. The pension will stop after his death. No money will be returned to the nominee.
5. Joint Life Annuity without ROP
In this the subscriber will get pension for his entire life. After his death, his wife/husband will get pension for his whole life. The pension will stop after the death of the wife/husband. No money will be returned to the nominee.
