National Pension System: How NPS death claim works during no nomination or invalid nomination

When a subscriber dies, the total pension wealth of the subscriber (100 per cent of the NPS corpus) will be allocated to the nominees or legal heirs of the subscriber.

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The National Pension System (NPS) helps in saving for retirement. The scheme can be used by Indian citizens as a long-term financial solution to ensure they have sufficient monetary support after retirement. NPS is a well-designed voluntary contribution retirement savings plan, which can help investors save enough money for their retirement throughout their work life.

During their work life, NPS account holders can save a portion of their salary in NPS. After retirement, the accountholders along with your legal heir will receive an annuity from the corpus amount generated over the years. But what if, the NPS account holder dies without having a nomination or having an invalid nomination?

What happens when there is no nomination in NPS in CRA

“In the event of the deceased subscriber’s nomination remaining unregistered prior to his death, all their pension wealth that has been accumulated over the time period will be paid to their family. This is based on the legal provision of either the heir certificate or a succession certificate. The heir certificate is issued by the Revenue Department of the State while the succession certification is issued officially by a court having competent authority,” says Ajit Kumar, CSO of KFintech. 

“As per NPS rules, in case there are no valid nominations during the subscriber’s exit due to death and there exists with the employer any records of the subscriber’s nominee for the purpose of terminal benefits, then that record will not be treated as a validator nomination,” he adds.   

NPS withdrawal in case of death of the subscriber

When a subscriber dies, the total pension wealth of the subscriber (100 per cent of the NPS corpus) will be allocated to the nominees or legal heirs of the subscriber, according to the regulations of the Pension Fund Regulatory and Development Authority.

“If the legal heir or nominee of the subscriber chose to receive a pension or annuity, then he or she will have to select a pension or annuity scheme as well as an ASP or Annuity Service Provider in the form of death withdrawal,” says Kumar. 

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How Legal Heir or Nominee Can Make NPS Claim

In order to claim an annuity, the nominee or legal heir of the deceased subscriber needs to submit a duly filled Death Withdrawal Form along with multiple supporting documents such as KYC documents, death certificate of the subscriber, proof of bank account and other necessary documents.

List of Documents Required 

Following is the list of documents required to claim the NPS corpus or annuity

  • Address or identity proof of the applicant
  • A self-undertaking affidavit
  • Signed application form
  • Birth certificate or date of birth proof for all the nominees or legal heirs
  • KYC documents
  • Bank account proof
  • Death certificate of the deceased NPS subscriber
  • Address proof of the deceased NPS subscriber

What if one or more nominees decline to claim the NPS Corpus

According to Kumar, if the nominee of the deceased subscriber is seeking NPS benefits then he or she will have to seek an indemnity bond. If the legal heir or nominee does not want to claim the NPS corpus of the deceased subscriber then he or she needs to file a relinquishment deed.

In case there are two nominees in which one of them being a minor and the other one being a major or an adult, then the major nominee or legal heir will have to complete a withdrawal form properly. The minor legal heir’s guardian will have to submit a withdrawal form along with the birth certificate of the minor.

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