PensionIndia

After seven years of launch of New Pension Scheme (NPS) now PFRDA has started to work on designing annuity product.

Pension Fund Regulatory and Development Authority (PFRDA) have sought an expression of interest (EOI) from life insurance companies to become an annuity service provider.

The criteria of eligibility include that annuity service provider should be a licensed life insurer of Insurance Regulatory and Development Authority (IRDA) with at least three years of experience of selling annuity and company should have the minimum networth of Rs 250 crore; and company is required to forward their EOI by 31 August 2011 to PFRDA.

Subscribers of NPS are expected to withdraw their retirement fund at the age of 60 and PFRDA is selecting annuity service providers under NPS so that NPS’s subscribers will be facilitated to buy an annuity plan after their exit from NPS. According to PFRDA it is mandatory that the 80% of their saving should be annuitised to provide them monthly pension.

PFRDA has also recommended six annuity models which annuity service providers can developed these include; monthly pension which can be purchased by a member at the age of 60 or before; in the case of the member’s death his spouse or dependent will continue to get monthly pension; PFRDA has also proposed that monthly annuity will be increased by simple rate of 5%, 6%, 7% or more; PFRDA has also suggested impairment annuity model and a scheme that is indexed to inflation. And annuity service providers will be also free to develop other annuity models as per the IRDA’s guidelines.

Source : Our Correspondent