If the NPS account holder dies due to any reason, what happens to his money? Does the nominee of the account holder get the benefit of pension after death and if the account holder has not made anyone a nominee, then what happens to the amount deposited by him?
NPS account: Everyone wants to live a better life after retirement. For this, along with a large fund, regular income is also needed so that one does not have to depend on anyone for daily needs. You can fulfill both these needs through NPS (National Pension System-NPS). NPS is a voluntary retirement plan which was started by the government in 2004. In this, the account holder gets market based returns.
In this scheme, money is invested in two ways. First Tier-1 which is a retirement account and second Tier-2 which is a voluntary account. You can take 60 percent of the total amount invested in NPS as a lump sum after turning 60, while 40 percent is used as annuity. But what happens to the money if the NPS account holder dies due to any reason? Does the nominee of the account holder get the benefit of pension after death and if the account holder has not made anyone a nominee, then what happens to the amount deposited by him? Know about this here.
Know what the rule says
According to PFRDA (Exit and Withdrawal under NPS) Regulations, if the account holder dies, 100% of the NPS corpus is paid to the nominee. If the nominee is willing to take pension, he is also given the option to buy annuity for this. In such a case, he has to choose the Annuity Service Provider (ASP) and the annuity scheme on the death withdrawal form.
In case of no nomination
If an account holder has not made a nominee, then in this case the deposited amount is given to his legal heir or family member. For this, the family will have to show the Succession Certificate. This certificate has to be submitted to the state revenue department, after which verification is done; after the verification process is completed, the amount deposited in the account is handed over to the family.
These documents are required
To claim the amount of NPS, the nominee or successor has to fill some documents and fill the death withdrawal form. This form can be easily downloaded from the website www.npscra.nsdl.co.in. This form contains a list of all the necessary paperwork, the documents given in this list have to be attached with the form. This includes death certificate, legal heir certificate / succession certificate, KYC documents and bank account proof (nominee and legal heir) etc.
The nominee or successor claiming the funds has to submit all the documents to the Point of Presence (POP). After this verification is done. After verification, the withdrawal application is forwarded to Protean CRA. After this the lump-sum amount is sent to the claimant’s account. If the nominee or successor has opted for annuity then the information will be shared with the annuity service provider chosen by him/her.
