Firstly, the PFRDA or Pension Funds Regulatory and Development Authority Bill 2022 has undergone a series of structural changes for policyholders. The bill talks about creating easy withdrawal options for retired policyholders. The PFRDA Bill is due to be presented to parliament during the previous budget session.
Unfortunately, the session ended and the bill remained under discussion. However, the bill will be proposed to parliament this monsoon. Once the bill is approved, all employees will see further improvements in the existing pension system. The committee also plans to separate the NPS or national pension system from the PFRDA. And a new pension trust wing will be set up for employees of private companies.
Once the bill amendments are in place, they will be a categorization of roles and responsibilities for PFRDA, IRDAI, SEBI and other regulators related to this bill. The PFRDA oversees pension products, new schemes developed for young people, Atal Pension Yojana, etc. IRDAI manages insurance aspects such as annuities, retirement products, etc.
How does the PFRDA bill affect the common man?
- The withdrawal limit for NPS subscribers is up to 25% after three years of account opening. Funds can only be withdrawn in certain scenarios, such as buying a house, curing an illness, etc. The percentage will increase once the bill is approved.
- Upon retirement, you can withdraw up to 60% of the total contribution paid into the fund. You can keep the rest on hand to earn an annuity on a regular basis. The bill plans to add further improvements such as, on a case-by-case basis, allowing retired participants to invest in a systematic withdrawal plan. This generates monthly income for retirees, creating a layer of security for their lives.
- The main change that this bill will bring to the public’s attention is the proper supervision of pension funds. The revised bill stipulates that these funds will have to be registered with the PFRDA.
- Usually, the exit time for subscribers used to run on T+4 business/settlement days, but now it has been reduced to T+2. , provides a better experience.
- To all public sector subscribers: The annuity purchased for the spouse will be reissued to the next family member upon their death. The premium rate 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 individual and corporate subscribers: All retirement assets will be paid to beneficiaries or beneficiaries.
- In cases of invalid nomination, if the subscriber made a valid nomination before his death, you can request the treatment.