National Pension Scheme (NPS): Individuals aspire to enhance their quality of life post-retirement. Achieving this goal requires not only a substantial financial reserve but also a consistent income stream, ensuring independence for daily expenses. The National Pension System (NPS) can address both of these requirements.
What is NPS and how this can be helpful after retirement?
Launched by the government in 2004, NPS is a voluntary retirement savings scheme that offers market-linked returns to its participants. Investments in NPS are made through two distinct tiers: Tier-1, which serves as a retirement account, and Tier-2, a voluntary savings account. Upon reaching the age of 60, account holders can withdraw up to 60% of their total investment as a lump sum, while the remaining 40% is allocated for annuity purposes.
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In the unfortunate event of the account holder’s death, what happens to the funds? The nominee designated by the account holder is entitled to receive the entire NPS corpus. Should the nominee wish to receive a pension, they have the option 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 funds will be transferred to the legal heir or family member, who must present a Succession Certificate to the state revenue department. Following verification, the deposited amount will be released to the family. To initiate a claim for the NPS funds, the nominee or heir must complete specific documentation, including the death withdrawal form, which can be conveniently downloaded from www.npscra.nsdl.co.in.
The form outlines all required documents, including the death certificate, legal heir certificate / succession certificate, KYC documents and bank account proof (nominee and legal heir) etc that must accompany the submission.