Pension regulator PFRDA has now enabled National Pension System (NPS) subscribers in the government sector to continue with their existing ‘default’ investment pattern and pension fund manager even after their retirement, reported Business Line.
So far, government subscribers were not permitted to contribute to their NPS account after their retirement until they choose to continue their account. Government NPS subscribers can now continue to contribute to their NPS account seamlessly after their superannuation without the need of submitting any request in this regard.
They will now be free even after their retirement to opt for any other investment pattern and pension fund manager, instead of continuing the same investment pattern.
Of the total NPS and APY subscriber base of 3.7 crore, the number of government sector subscribers stood at 81 lakh as of end August 2022. The number of corporate NPS subscribers stood at about 16 lakh.
For such subscribers who opt for existing ‘default’ investment pattern post retirement, both their prospective and legacy contributions would continue to be governed by this investment pattern, the PFRDA has said.
This latest PFRDA move would come as huge relief for over 30,000 government retirees (current estimated number annually) every year as they now have an option to continue to be invested as per the existing investment pattern/PFM which was prevailing during their employment.
This would help them roll through their golden years without worrying about making fresh decisions — on superannuation — on either the investment pattern or identifying the fund manager with a good track record to manage their retirement corpus.
In the ‘default’ investment pattern, the NPS contributions of government employees were being invested in equities with a cap of 15 per cent. The remaining 85 per cent is being parked in mainly government securities and to some extent corporate bonds.