NATIONAL PENSION SYSTEM
- April 25, 2021
- Posted by: OptimizeIAS Team
- Category: DPN Topics
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NATIONAL PENSION SYSTEM
Subject: Economy
Context:
Concept:
- Started as the New Pension Scheme for government employees in 2004 under a new regulator called the Pension Fund Regulatory and Development Authority (PFRDA), the National Pension System (NPS) has been open for individuals from all walks of life to participate.
- The law regulating the NPS allows members to withdraw just 60% of their accumulated savings at the time of retirement. With the remaining 40%, it is mandatory to buy an annuity product that provides a fixed monthly income to retirees till their demise.
- Members who accumulate up to ₹2 lakh in their NPS account at the time of retirement are exempted from the mandatory annuitization, and can withdraw the full amount.
What overhaul is the PFRDA planning?
- Last week, PFRDA chairman said this limit will soon be revised to ₹5 lakh.
- Separately, the regulator has decided that the annuity purchase stipulation for 40% of members’ retirement corpus should be dropped altogether. Legislative amendments to this effect are being worked out for Parliament’s approval.