First things first, the PFRDA or Pension Fund Regulatory and Development Authority Amendment bill 2022 has endured a slew of structural changes for the subscribers. The bill talks about creating easy withdrawal options to subscribers upon retirement. The PFRDA bill has to be presented in the parliament in the previous budget session.
Woefully, the session concluded, and the bill remained pending in discussion. However, the bill will be proposed in the parliament this monsoon. Once the bill gets final approval, all employees will get to see new improvements in the existing pension system. The committee also plans to separate the NPS or National Pension System from PFRDA. And a new wing of pension trust will be set up for the private company employees.
Once the bill changes fall in place, they’ll be categorisation of roles and responsibilities for PFRDA, IRDAI, SEBI, and other regulators linked to this bill. The PFRDA oversees pension products, new schemes drafted for the youngsters, Atal Pension Yojana, etc. The IRDAI administers insurance aspects like annuities, retirement products, etc.
How does the PFRDA bill affect the common man?
- The withdrawal limit for NPS subscribers is up to 25% post-three years of account opening. One can pull out funds only in certain scenarios like buying a house, curing a health disease, etc. The percentage is going to rise once the bill gets approved.
- Upon retirement, you get to withdraw up to 60% of the total contribution made to the fund. You can keep the rest alongside to earn annuity on a regular basis. The bill is planning to add new improvements like, case-in-point, enabling pension members to invest in a Systematic Withdrawal Plan. This generates monthly income to the retirement people, thereby, creating a layer of security for their life.
- The major change this bill is going to bring it to the public attention is proper supervision of the superannuation funds. The revised bill states that these funds will need to get registered with the PFRDA.
- Generally, the exit timeline for subscribers was executed on T+4 working/settlement days, but now, that’s been reduced to T+2. This aids in fulfilling the needs of the subscribers in less time, and at the same time, encounters better experience.
- To all government sector subscribers: The annuity bought for the spouse will be re-issued to the next family member on their demise. The rate of premium remains the same. The annuity order follows the living dependent mother of the deceased subscriber, and next to the living dependent father of the deceased subscriber.
- To all citizen and corporate subscribers: The total pension wealth will be paid to the nominees or legal heirs.
- To the invalid nomination cases, if the subscriber made a valid nomination prior to death, you can claim for processing.