The Pension Fund Regulatory and Development Authority (PFRDA) has given the nod to intermediaries to use a video-based customer identification process (VCIP) for withdrawal claims in case of the death of NPS (National Pension System) subscribers, the pension regulator said on Wednesday.
In a circular on January 4, 2023, PFRDA said, “In line with the technological advancements and for ensuring seamless exit claim processing, it has been decided to allow the intermediaries to use VCIP as an added due diligence mechanism for verification of the nominee/claimant/legal heir while processing the withdrawal claims in case of death of NPS subscribers.” The regulator said it has been receiving representations from intermediaries to allow the use of VCIP for faster processing of withdrawal claims.
The regulator observed that VCIP would further strengthen the intermediaries’ due diligence efforts to verify that the nominees or the legal heirs are the same people as the one shown in the documents for processing withdrawal claims. The nominee’s credentials can be determined through Aadhaar e-KYC.
The circulator said, “All the intermediaries are hereby informed to use Instant Bank Account Verification through penny drop for the purpose of verifying claimants’ bank account information as part of claim processing, which allows independent verification of bank account and name matching.”
PFRDA has been encouraging PoPs (Point-of-Presence), especially online PoPs, to use emerging technologies to enhance their due diligence process for error-free, timely claims processing. The NPS trust, as such, could use the VCIP option to process e-NPS death claims.
Besides intermediaries registered with PFRDA, those registered with other financial sector regulators are also permitted to follow the VCIP guidelines for NPS-related activities for the ease of customers.
Recent PFRDA Guidelines For NPS Subscribers
PFRDA has introduced several changes for the convenience of customers lately. It introduced an NPS prosperity planner to calculate the probable retirement income for the subscribers. The calculator helps subscribers calculate their retirement income based on annuity options and contributions to the NPS.
The facility, announced by PFRDA in a circular on December 9, 2022, is available for individuals through the three central recordkeeping agencies (CRAs)—Protean (formerly NSDL), Fintech, and CAMS.
The NPS Prosperity Planner was launched to commemorate India’s 75 years of independence. Individuals can access the calculator after logging in to their NPS account with the respective CRAs.
PFRDA has also proposed changes to allow systematic lumpsum withdrawals for NPS subscribers.
The proposed "smart withdrawal facility" allows an NPS subscriber to withdraw the amount either monthly, quarterly, half-yearly or annually for up to 75 years. It can be availed of upon a one-time request through online or offline mode.
Currently, the subscribers can withdraw the amount in a single tranche or on an annual basis, with an option to defer the withdrawal post-60 years or superannuation till 75 years.
