Introduction

In reference to NPS, an annuity is a plan which provides a fixed monthly amount to the subscriber. In case of premature exit minimum 80% and in case of exit after maturity, a minimum 40% of NPS corpus will be used to purchase an annuity plan. There are various annuity service providers (ASP), and subscribers can choose any one according to their preference.

In this article, we will understand what is an annuity and why do you need to buy it.

What is an annuity?

An annuity is a kind of financial instrument which pays its subscriber a fixed sum at regular intervals. Think of an annuity as a reverse insurance plan. An insurance plan provides financial protection to your family from your untimely demise. You make regular premiums for the insurance plan and receive a lump sum in case of death. In an annuity, you pay lump sum payments to annuity service providers (ASP) and it pays you regular payments for the rest of your life. An annuity provides financial protection to you in case of living a long life without employment after 60 years of age.

Types of annuity

There are various types of annuities being offered by annuity service providers (ASPs). You can choose anyone as per your requirement. For example, someone may want to start the monthly payouts immediately after the superannuation but someone else might want to defer in starting the monthly payouts. These different qualities of annuities cater to different individuals as per their financial requirements.

Criteria	Annuity types
Frequency of Premium	Single, Regular
Type of Payouts	Fixed, Variable
Time Payouts Start	Immediate, Deferred
Duration of Payouts	Life Annuity, Term Certain
No. of People Benefitting	Single Life, Joint/Survivor
Nature of Purchaser	Individual, group

There are even more annuity options available. Someone may want to choose to increase his monthly pension amount to tackle inflation whereas someone else might want to cover his spouse also for pension.

Some other common annuity types are as below:

Common Annuity Options
Life Annuity	Pays uniform rate of pension till subscriber survive
Life and Certain	Pays 5, 10, 15 or 20 years of certain pension & then till the time subscriber survive.
Life and Repurchase	Pays for life with an increase in pension amount @ 3% p.a.
Inflation-Linked	Spouse is also covered. Pension is paid till the life of the subscriber, and post-death is also paid to the spouse.
Life and Survivor	Spouse is also covered. Pension is paid till the life of the subscriber, and post-death also paid to the spouse.

 

Features of annuity in NPS

Here are some features of annuity that you must know before buying an annuity or exiting from your NPS account:

1. In case of exit after maturity, a minimum 40% of the NPS corpus will be used to purchase an annuity.
2. In case of a pre-mature exit minimum, 80% of NPS corpus will be used to purchase an annuity.
3. If after the maturity period, your investment is less than 5 lakhs you don’t have to buy an annuity, you can withdraw the whole amount.
4. If before the maturity period your investment is less than 2.5 lakhs you don’t have to buy an annuity, you can withdraw the whole amount.
5. The annuity paid to the subscriber is taxable as per applicable tax slab rates.
6. Lump-sum amount paid to the nominee / legal heir after the death of the subscriber is exempted from tax.

Benefits of annuity in NPS

Regular Income

Purchasing an annuity under NPS allows you to receive a monthly pension for a lifetime after retirement. You can also choose to include your spouse in this plan by choosing a life and survivor plan under annuity in which pension will be paid to your spouse after your death.

No investment cap

There is no investment limit in NPS and in the annuity. If you wish to receive a higher pension after retirement you simply do so by increasing your NPS investment.

Flexibility

Different annuity plans under NPS give you the flexibility to choose from any available options which suit your needs.

Monthly pension calculator under NPS

You can use this calculator created by NSDL to know the amount of monthly pension that you will receive after your retirement.

Moreover, you can also use this calculator made by NPS Trust to calculate the tentative pension and lump sum amount you will get after retirement.

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Annuity options under NPS

There are many insurance companies that sell annuity plans but NPS subscribers can buy annuity only from one of the 14 companies empanelled with PFRDA.

The list of these companies is as below:

List of Annuity Service Providers (ASPs) impanelled by PFRDA
S.no	Name of ASPs	Contact person	Address	Email id	Contact no.
1	Life Insurance Corporation of India	Mr. Biswajit Das, Dy. Secretary (Direct Marketing) & Mr Avinash Raulwar, Admn. Officer (Direct Marketing)	LIC of India, Central Office, Distance Marketing Centre, New India Building, Ground floor, Santa Cruz (W) Mumbai 400054	online_dm@licindia.com	022 – 26139094 022 – 67819280 022 – 26117044 022 – 67819288
2	HDFC Standard Life Insurance Co. Ltd	Customer Service Helpline	HDFC Life, 13th Floor, Lodha Excelus, Apollo Mill Compounds, N M Joshi Marg, Mahalakshmi, Mumbai – 400011.	npsannuity@hdfclife.com	+91- 8916687777
3	ICICI Prudential Life Insurance Co. Ltd.	Mr. Vishal Pradhan, Mr. Mohit Vats, Mr. Abhimanyu Patil, Mr. Paawan Dayaramani, Mr. Mukesh Kumar.	ICICI Prudential Life Insurance Company, ICICI Prulife Towers, 1089 Appasaheb Marathe Marg, Prabhadevi, Mumbai- 400025	npsannuity@iciciprulife.com 1.mohit@iciciprulife.com abhimanyu.patil@iciciprulife.com paawan.dayaramani@iciciprulife.com mukesh.kr@iciciprulife.com	022 – 62955609 +91 – 9910643310 +91 – 7875518916 +91 – 8827824160 +91 – 9999078665
4	SBI Life Insurance Co. Ltd.		SBI Life Insurance Co Ltd, New Business Department, Central Processing Centre, Seawoods Grand Central, Tower 2, 8th level, Plot No. R-1, Sector-40, Seawoods,Nerul Node, Navi Mumbai – 400706.	online.cell@sbilife.co.in npsannuity@sbilife.co.in	022 – 66456236 / 66456178 / 66456139 / 66456107
5	Star Union Dai-ichi Life Insurance Co. Ltd.	Ms. Debasmita Guru, Manager & Ms. Shabana Shaikh, Senior Manager	Star Union Dai-ichi Life Ins. Co Ltd, Raghuleela Arcade, 11th Floor, IT Park, Sector 30A, Vashi, Navi Mumbai – 400703,	gopal.krishnan@sudlife.in customercare@sudlife.in	022 – 39546274
6	Bajaj Allianz Life Insurance Company Limited	Mr. Anil Verma	Bajaj Allianz House, Airport Road, Yerwada, Pune, Maharashtra – 411 006	Anil.Verma@bajajallianz.co.in	020 – 66026789
7	Edelweiss Tokio Life Insurance Company Limited	Mr. Benu Singhal	3rd & 4th floor, Tower 3, Wing B, Kohinoor City Mall, Kohinoor City, Kirol Road, Kurla (W), Mumbai – 400 070	Benu.singhal@edelweisstokio.in	+91 – 9584055786
8	India First Life Insurance Company Limited	Mr. Pankaj Rathour	301, B Wing, The Qube, Infinity Park, Dindoshi – Film City Road, Malad (East), Mumbai – 400 097	pankaj.rathour@indiafirstlife.com	022 – 68570596
9	Canara HSBC Oriental Bank of Commerce Life Insurance Company Limted	Mr. Harpreet Singh	2nd floor, Orchid Business Park, Sector – 48, Sohna Road, Gurugram- 122018	harpreet.singh2@canarahsbclife.in	+91 -7307701414
10	Kotak Mahindra Life Insurance Company Limited	Mr. Deepak Gupta Ms. Trupti Boraste	7th floor, Kotak Infiniti, Building Number 21, Infinity Park, Off W.E. Highway, General A K Vaidya Marg, Malad (E), Mumbai – 400 097	kli.nps@kotak.com trupti.boraste@kotak.com gupta.deepak@kotak.com	022 – 66057369  022 – 66057514
11	Max Life Insurance Co. ltd.	Mr. Karan Mehra	3rd, 11th, 12th Floor DLF Square Building, Jacaranda Marg, DLF Phase – 2, Gurgaon, Haryana 122002	Nodal.Officer@maxlifeinsurance.com	1860 120 5577
12	Tata AIA Life Insurance Company Limited	Mr. Adil Husain Siddiqui	14th Floor, Tower A, Peninsula Business Park, Senapati Bapat Marg, Lower Parel, Mumbai 400013.	Adilhusain.Siddiqui@tataaia.com	+91 – 8446055533
13	PNB MetLife India Insurance Co. Ltd	Mr. Krishnendu Bhunia	Unit No. 701, 702 and 703, 7th floor, West Wing, Raheja Towers, 26/27 M G Road, Bangalore -560001, Karnataka	india_nps.annuity@pnbmetlife.com	022 – 41790000
14	Shriram Life Insurance Company Limited		Plot no 31 & 32, 5th & 6th Floor, Ramky Selenium, Besides Andhra Bank Training Center, Financial District, Gachibowli, Hyderabad – 500032		1800-103-6116

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