Learn about NPS Pension Benefits after Death. Understand who gets the pension after the subscriber's death in the National Pension Scheme.
Overview:
The National Pension Scheme (NPS) is a popular retirement savings scheme in India. The scheme is designed to provide a stable source of income in the form of pension after retirement. However, many people are unclear about what happens to their pension benefits in case of their death. In this blog, we will discuss the provisions of the NPS scheme for pension benefits after death.
Introduction to NPS Scheme
The National Pension Scheme (NPS) is a defined contribution retirement savings scheme launched by the Indian government in 2004. It is open to all Indian citizens between the ages of 18 and 60. The scheme is regulated by the Pension Fund Regulatory and Development Authority (PFRDA) and provides various investment options to subscribers.
The National Pension Scheme is a voluntary and portable scheme, meaning that subscribers can choose how much they want to contribute and can transfer their account from one location to another. The scheme has two types of accounts – Tier I and Tier II. The former is a mandatory account for all subscribers, while the latter is a voluntary account for additional savings.
Calculate your pension with our precise NPS pension calculator for accurate retirement planning.
Who Can Claim NPS Death Benefits?
The National Pension System (NPS) is intricately designed to cater to the retirement needs of the working population, ensuring financial stability in their later years. However, life’s uncertainties are inevitable, necessitating proactive measures to safeguard your family’s well-being in the event of your demise.
In the unfortunate circumstance of the subscriber’s death, the automatic beneficiaries of the NPS funds are the registered nominees at the Central Recordkeeping Agency (CRA). Should there be no registered nominees at the CRA, the nominee documented in the subscriber’s office records is considered eligible to receive the terminal benefits on behalf of the deceased.
In the absence of both registered nominees and office records, the legal heirs of the deceased subscriber have the right to claim the NPS funds. This provision ensures that even in the absence of formal nominations, the rightful individuals, namely legal heirs, can step in to claim the benefits and manage the financial aspects left behind by the deceased.
Documents Required for NPS Death Benefits
In the unfortunate event of a subscriber’s demise, a legal heir or nominee has the option to claim the death benefit offered under the National Pension System (NPS). The process involves specific steps and the submission of necessary documents:
Withdrawal Form: The nominee must choose and complete the applicable withdrawal form based on the category of the deceased subscriber. Form 101 GD is for government employees, form 303 for corporate sector employees, and form 503 for those protected under the Swavalamban sector.
PRAN Card: The original Permanent Retirement Account Number (PRAN) card must be submitted along with the withdrawal form. If the PRAN card is unavailable, a notarized affidavit is required.
Cancelled Cheque: Provide a cancelled cheque containing the claimant’s details, including name, bank account number, and IFSC code. For electronic transfers, a bank certificate with the necessary information is required.
Death Certificate: Attach the death certificate of the subscriber along with the withdrawal form.
Succession Certificate/Legal Heir Certificate: Provide a succession certificate or legal heir certificate as evidence of the claimant’s status as the legal heir.
Address and ID Proof: Submit proof of address and identification for the nominee or legal heir, which can be any valid government-approved ID card such as a passport, driving license, Aadhar card, etc.
By following these steps and providing the necessary documentation, the legal heir or nominee can initiate the process to claim the death benefit under the NPS.
NPS Pension Benefits After Death
The National Pension Scheme provides pension benefits to the subscribers after retirement. However, in case of the death of a subscriber, the pension benefits will be transferred to the nominee or legal heir. The rules for transfer of pension benefits after death depend on the type of account and the age of the subscriber at the time of death.
Transfer of Pension Benefits in Tier I Account
In the case of a subscriber with a Tier I account, the pension benefits will be transferred to the nominee or legal heir upon the subscriber’s death. The nominee can be any person designated by the subscriber to receive the pension benefits in the event of their death. If the subscriber has not nominated anyone, the legal heir will be entitled to receive the pension benefits.
If the nominee is a minor, the subscriber can appoint a guardian to receive the pension benefits on behalf of the minor. If the subscriber has multiple nominees, the pension benefits will be divided equally among them. However, the subscriber can specify the percentage of pension benefits to be received by each nominee.
Transfer of Pension Benefits in Tier II Account
In the case of a subscriber with a Tier II account, the pension benefits will be transferred to the nominee or legal heir upon the subscriber’s death. The same rules for nomination and transfer of benefits apply as in the case of a Tier I account.
However, it is important to note that the Tier II account does not offer any tax benefits. Therefore, the pension benefits received by the nominee or legal heir will be subject to tax as per the applicable tax laws.
Why is NPS important?
The National Pension Scheme (NPS) is an important investment option for individuals planning for their retirement. Here are some reasons why NPS is important:
- Tax Benefits: NPS offers tax benefits at the time of investment as well as at the time of maturity. Contributions made to NPS are eligible for tax deductions under Section 80C of the Income Tax Act, while the corpus received on maturity is tax-free up to a certain limit.
- Flexible Investment Options: NPS offers the flexibility to choose investment options and pension fund managers based on the subscriber’s risk appetite and retirement goals. Subscribers can choose between equity, debt, and government bond funds.
- Low Cost: NPS has a low cost structure, with a maximum of 0.01% fund management charge.
- Portability: NPS is a portable pension scheme that allows subscribers to operate their account from any location and transfer their pension benefits from one account to another.
- Annuity Options: NPS offers various annuity options to subscribers, allowing them to choose the best option that suits their retirement goals and financial needs.
- Social Security: NPS is a government-sponsored pension scheme, which offers social security and financial stability to individuals after retirement.
- Family Security: In the event of the subscriber’s death, NPS provides financial security to the nominee or legal heir, ensuring that their family is taken care of.
NPS Death Benefit Claim Procedure
In the unfortunate event of a subscriber’s untimely death before maturity, the nominee or guardian of a minor nominee can claim the National Pension System (NPS) death benefits. To facilitate a smooth process and receive the benefit proceeds in a lump sum, the following steps must be adhered to:
- Eligibility for Minor Nominee:
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- A guardian can claim on behalf of a minor nominee, provided they are supported by a birth certificate.
- Download and Fill Claim Form:
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- Download the appropriate claim form from the official channels.
- Complete all the required fields in the claim form.
- Submission to POP-SP:
- Submit the duly filled claim form along with the necessary supporting documents to the Point of Presence Service Provider (POP-SP) associated with the NPS for claim processing.
- Claim Processing by POP-SP:
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- The POP-SP initiates the claim process, generating an exit claim ID.
- The claim is verified for accuracy and completeness during the document verification process.
- Check Claim Status:
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- Use the limited access claim ID to check the status of the claim at the Central Recordkeeping Agency (CRA) portal.
- Credit of Claim Proceeds:
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- The claim proceeds are credited to the nominee’s or guardian’s account based on the submitted documents.
- Disposal of Claim by POP-SP:
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- In the final step, the POP-SP disposes of the claim in favor of the nominee or guardian.
- Processed documents are transmitted to the CRA for storage and future reference.
By diligently following these steps and ensuring the submission of all required documents, the nominee or guardian can successfully claim the NPS death benefits.
Does NPS have a death benefit?
Yes, NPS (National Pension System) has a death benefit in the form of a lump sum payment to the nominee or legal heir of the subscriber in case of the subscriber's death.
What happens in the case of the death of a subscriber before exit from NPS?
In the case of the death of a subscriber before exit from NPS, the nominee or legal heir of the subscriber is entitled to receive the accumulated pension wealth as a lump sum or annuity, as per the subscriber's choice.
What is the death gratuity under NPS?
The death gratuity under NPS is a lump sum payment made to the nominee or legal heir of the subscriber in case of the subscriber's death. The amount of the death gratuity is equal to the entire accumulated pension wealth of the subscriber.
What happens to pension contribution after death?
In the case of the death of a subscriber, the pension contribution stops, and the accumulated pension wealth is paid to the nominee or legal heir of the subscriber.
How do I claim my NPS death claim?
To claim an NPS death claim, the nominee or legal heir of the subscriber needs to submit a claim form along with the required documents, such as the death certificate, identity proof, and bank account details.
Does NPS give a lifetime pension?
Yes, NPS provides a lifetime pension to the subscriber in the form of an annuity. The annuity is paid out of the accumulated pension wealth of the subscriber.
Can I withdraw money from NPS if I resign?
Yes, you can withdraw money from NPS if you resign. However, the amount of withdrawal is subject to certain conditions and restrictions.
Is NPS final withdrawal taxable?
Yes, the final withdrawal from NPS may be taxable as per the income tax laws in India. However, there are certain exemptions and deductions available based on the specific circumstances.
What happens to 40 NPS in case of death after 60?
In the case of the death of a subscriber after 60 years of age, the nominee or legal heir of the subscriber is entitled to receive the entire accumulated pension wealth as a lump sum or annuity, as per the subscriber's choice.
What is the maximum amount of death gratuity?
The maximum amount of death gratuity under NPS is equal to the entire accumulated pension wealth of the subscriber.
How is NPS gratuity calculated?
The NPS gratuity is calculated based on the accumulated pension wealth of the subscriber and the annuity option chosen by the subscriber.
Can a daughter get her father's pension?
Yes, a daughter can get her father's pension if she is the nominee or legal heir of the subscriber and is entitled to receive the accumulated pension wealth.
Who claims the death benefit?
The death benefit under NPS is claimed by the nominee or legal heir of the subscriber.
Does the pension become half after death?
In the case of the death of a subscriber, the pension stops, and the accumulated pension wealth is paid to the nominee or legal heir of the subscriber. The amount of the pension received by the nominee or legal heir depends on the annuity option chosen by the subscriber.
Conclusion
In conclusion, the National Pension Scheme (NPS) is a popular retirement savings scheme in India that provides stable pension benefits to subscribers after retirement. In case of the death of a subscriber, the pension benefits will be transferred to the nominee or legal heir. The rules for transfer of benefits depend on the type of account and the age of the subscriber at the time of death. Therefore, subscribers need to nominate a person as a nominee to ensure that their pension benefits are transferred to the intended person.
If you are a subscriber of the National Pension Scheme, it is important to be aware of the rules and regulations governing the scheme. You can also check the status of your NPS account online through the official website of the PFRDA. By staying informed and updated, you can make the most of your National Pension Scheme and ensure a comfortable retirement for yourself and your loved ones.
