Pension regulator moots proposal for systematic withdrawals

Pension Fund Regulatory and Development Authority (PFRDA) is looking to have a systematic withdrawal plan for National Pension System (NPS). According to the proposal, individuals will have an option to withdraw a fixed sum from their pension fund anywhere between 15-20 years after retirement. Hemant Contractor, Chairman, PFRDA on the sidelines of an Asia Insurance Post summit said that this proposal was discussed in a meeting with the Finance Ministry which will help individuals withdraw a certain amount of their pension at regular intervals.Currently, upon normal superannuation, at least 40 percent of the accumulated pension wealth of the subscriber has to be utilised for purchase of annuity which will provide a monthly pension of the subscriber. The balance is paid as lump sum to the subscriber.The assets under management (AUMs) of NPS have touched Rs 1.7 lakh crore. Contractor said that this will touch Rs 1.75 lakh crore by the end of this financial year. “We expect a 45 percent growth in AUMs over last year,” he added.The number of new subscribers is also on the rise. Contractor said that on an average, 7000-8000 join Atal Pension Yojana every day. For NPS, the number of individuals joining is 2000-2300 on an average.With the Finance Minister announcing in his Budget speech that partial withdrawals in NPS will be made tax free, the PFRDA chairman expects this to give a boost to attracting new subscribers.There is also a proposal to have all pension products to be regulated by PFRDA. This was mooted by PFRDA which meant that all pension/annuity products sold by insurers and mutual funds would also be regulated by the pension regulator. Contractor said that while a commitee has been formed by the Finance Ministry to look into this matter, no decision has been taken on the same.Further, there is also a proposal to increase equity allocations to 50 percent from 15 percent currently. Contractor said that the Finance Ministry is yet to take a final call on this matter.