Under the Exit and Withdrawal rules of NPS, if the account holder dies, the entire amount is paid to the nominee. This means 100% of the NPS corpus will be transferred. The nominee has the option to either take the fund in a lump sum or receive it as a pension.
Everyone wants to live a comfortable life after retirement, and planning for this should start early during the working years. The National Pension Scheme (NPS), launched by the Central Government in 2004, is one such option to secure retirement. This article will provide all the details regarding whether nominees can receive a pension after the account holder’s death.
Investment Options in NPS
Investment in the National Pension Scheme (NPS) can be made in two ways:
- Tier-1 Account – A retirement account.
- Tier-2 Account – A voluntary account.
In Tier 1, 60% of the total investment amount can be withdrawn after retirement (after the age of 60), while the remaining 40% is used to purchase an annuity.
What Happens When the NPS Account Holder Dies?
If the NPS account holder dies before retirement, the entire amount is paid to the nominee, which is 100% of the NPS corpus. The nominee can choose to take the fund in a lump sum or receive it as a pension. In the case of pension, the nominee must select an annuity service provider and fill out the relevant forms.
What Happens If There Is No Nominee?
If the NPS account holder has not nominated anyone, the amount in the account will be given to the legal heir or family member.
Documents Required for Withdrawal Without a Nominee
If no nominee is designated, the legal heir must provide a succession certificate, which is submitted to the Revenue Department. After verification, the amount will be transferred to the legal heir. For the withdrawal process, the legal heir must fill out the Death Withdrawal Form available on the official website www.npscra.nsdl.co.in. Required documents include:
- Succession certificate
- KYC documents
- Death certificate
- Bank account proof