Pension Fund Regulatory & Development Authority (PFRDA) is mulling giving to its subscribers an option of parking 40 percent of the corpus that is mandatory to purchase an annuity at the time of retirement with a pension fund manager to get better benefits.
As of now, subscribers having a corpus of over Rs 2 lakh at the time of retirement or attaining the age of 60 years need to buy an annuity, offered by insurance companies, on a mandatory basis. They can take out the remaining 60 percent as a lump sum.
They also have the option of withdrawing the remaining 60 percent as a lump sum. To put it more simply, if a subscriber has a corpus of Rs 2 lakh or less at the time of retirement, it is not necessary for that individual to buy an annuity because the amount given as a monthly pension is very less.
PFRDA Chairman Supratim Bandyopadhyay explained during a virtual conference that in the National Pension System (NPS), as long as money is accumulated in the corpus, after retirement at the age of 60, one must pay 40 percent of the corpus to buy an annuity and the remaining 60 percent can be withdrawn as a lump sum.
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