Low annuity returns? Opt for systematic withdrawal

financialexpress.com:

Subscribers of National Pension System (NPS) will soon get the option to opt for systematic lump sum withdrawal (SLW) on a periodical basis — monthly, quarterly, half-yearly or annually till the age of 75 years. The facility will be available for both Tier I and Tier II accounts and will be available only for normal exit and not for premature exit or exit due to the death of the subscriber.

Experts say the staggered withdrawal process will help subscribers to earn higher returns as corpus will continue to remain market-linked for another 15 years. Moreover, the smart withdrawal facility will make NPS more popular as annuity returns are low. The SWL will be applicable only for the lump sum portion and subscribers can either opt for annuity immediately or defer annuity till 75 years.

At present, subscribers on superannuation or reaching the age of 60 can defer availing of annuity and withdrawing the lump sum till the age 75 years. On retirement, subscribers have to withdraw 60% of the corpus and the remaining amount will have to be invested in annuities. Life insurers offer five types of annuity plans such as annuity for life for the subscriber, annuity for life of the subscriber and then to the spouse after the subscriber’s death, annuity for life and purchase price returned after the death of the subscriber, etc.

How to opt for SLW

For subscribers, SWL will be provided in the subscriber login with eSign or dual factor OTP authentication as a separate functionality. The facility to modify, cancel & redeem SLW will be provided in the login only. In case of modifications, subscribers will be able to modify the mandate.

Subscribers will have to select the frequency, amount and the start date. The end date will be derived