New Delhi: In another significant move to expand pension coverage in the country, the maximum age for joining the National Pension System (NPS) has been raised from 60 years to 65 years for individuals who are not government employees, the finance ministry said on Wednesday.
Those eligible include corporate employees and self -employed. The move by the Pension Fund Regulatory and Development Authority (PFRDA) will enable people aged between 60 and 65 years to join NPS and make contributions to it until they turn 70, the ministry said in a statement.
Until now, individuals between 18 and 60 years of age could join NPS.
“The subscriber joining NPS beyond the age of 60 years will have the same choice of the Pension Fund as well as the investment choice as is available under the NPS for subscribers joining NPS before the age of 60 years,” the statement said.
According to PFRDA, the initiative will allow a larger segment of society, particularly senior citizens, to reap the benefits of NPS and plan for a regular income.
The annuity rates available at an older age offer better returns than that at the age of 60 or less, it said.
NPS is a voluntary contributory retirement savings scheme designed to enable systematic savings during a subscriber’s working life. It is an attempt at providing an adequate retirement income to every citizen of India.
“Subscriber joining NPS after the age of 60 years will have an option of normal exit from NPS after completion of 3 years in NPS. In this case, the subscriber will be required to utilize at least 40% of the corpus for purchase of annuity and the remaining amount can be withdrawn in lump-sum,” the statement said. If a subscriber wants to exit from NPS before the completion of three years, he/she will be allowed to do so. In such a case, the subscriber will have to use at least 80% of the corpus to purchase an annuity and withdraw the remaining, it added.
In case of death of a subscriber, the entire corpus will be paid to the nominee.
NPS was introduced in 2004 for government employees and opened to every citizen in 2009. It now has a corpus of Rs2 trillion with a subscriber base of over 16 million people. The subscriber base includes central and state government employees and those from the private sector, including the informal economy. The Atal Pension Yojana, a scheme launched in 2015 for the unorganized sector, is a part of the subscriber base with about 5.8 million beneficiaries accounting for a corpus of about Rs2,500 crore.