NPS: Individuals aspire to enhance their quality of life post-retirement. Achieving this goal necessitates a steady income alongside a substantial fund, ensuring independence in meeting daily expenses. The National Pension System (NPS) serves to address both of these requirements. Established by the government in 2004, NPS is a voluntary retirement scheme that offers account holders returns based on market performance.
Know the rule
Investments in this program are categorized into two tiers: Tier-1, which functions as a retirement account, and Tier-2, which is a voluntary savings account. Upon reaching the age of 60, account holders may withdraw 60 percent of their total NPS investment as a lump sum, while the remaining 40 percent is allocated for annuity purposes. However, questions arise regarding the fate of the funds in the event of the account holder’s demise. Specifically, does the nominee receive pension benefits after the account holder’s death, and what occurs if no nominee has been designated?
Indian case of of the account holder’s death
In the event of the account holder’s death, the entire NPS corpus is disbursed to the nominee. Should the nominee wish to receive a pension, they are afforded the opportunity to purchase an annuity. In this scenario, the nominee must select an annuity service provider (ASP) and the corresponding annuity scheme on the death withdrawal form.
If no nominee has been appointed, the deposited funds will be transferred to the legal heir or family member, contingent upon the presentation of a Succession Certificate. This certificate must be submitted to the state’s revenue department, whereupon verification will take place. Once this process is completed, the funds in the account will be released to the family.
What to do
To initiate a claim for the NPS funds, the nominee or heir is required to complete several documents, including the death withdrawal form, which can be conveniently downloaded from the website www.npscra.nsdl.co.in. The form provides a comprehensive list of necessary documentation, which must be submitted alongside it, including the death certificate and either a legal heir certificate or a succession certificate, KYC documents and bank account proof (nominee and legal heir) etc.