Annuity in NPS

Having a steady income after retirement and also having enough resources is crucial for financial freedom during the golden years of one's life. To make this a possibility, investing in retirement schemes is highly crucial. NPS or national pension scheme regulated by PFRDA is one such voluntary retirement plan. This plan mandates the subscriber to stay locked in until 60 years of age.

Read more
Guaranteed Pension For Life For You And Your Spouse

Invested Amount Returned To Your Nominee

Best Pension Options
  • Invest 20 Lacs Get ₹ 1.6 Lacs pension for Life

  • Guaranteed Return For Life

  • Multiple Annuity Options

*All savings are provided by the insurer as per the IRDAI approved insurance plan. Standard T&C Apply

Buy Online and Get ₹ 1.4 Lacs extra#
Secure Your Retirement with Annuity Plans
100% Guaranteed
Pension For Life
View Plans
Please wait. We Are Processing..
Plans available only for people of Indian origin By clicking on "View Plans" you agree to our Privacy Policy and Terms of use #For a 55 year on investment of 20Lacs #Discount offered by insurance company
Get Updates on WhatsApp

The subscriber can choose a purchase price and the asset class in which the investment will be put. However, it is not just a simple corpus retirement plan. NPS provides both lump-sums on retirement along with regular annuity income after getting retired. 40 per cent of the corpus goes into an annuity scheme that one will have to buy compulsorily. 

Ideas about annuity in NPS are quite polarizing, as many think of it as an advantage, and others think the opposite. Let's have a look at what annuity schemes are in NPS and how they can serve benefits to retirees. 

About Annuities in NPS

An annuity in NPS is a type of investment that offers regular dividend payments for a stipulated time or life. NPS has included the annuities scheme in its plan to safeguard the financial stability of retirees. From the 100 per cent corpus of NPS, 60 per cent can be withdrawn as a lump sum after retirement. And, the rest 40 per cent, is paid as regular income after retirement to the subscriber and then to the spouse. 

The annuity schemes are provided by the annuity service providers who are impanelled with PFRDA. The subscriber will have to buy an annuity scheme from the chosen ASP, and 40 per cent of the corpus will be invested in the scheme. The ASP itself will add some money to the returns, and the earnings will be distributed at regular intervals chosen by the subscriber.

There are 11 ASPs as of now who works with PFRDA to provide annuity in NPS:

  • Bajaj Allianz life insurance Co. Ltd. 
  • Canara HSBC oriental bank of commerce life insurance Co. Ltd.
  • HDFC life insurance Co. Ltd.
  • ICICI prudential life insurance Co. Ltd.
  • India first life insurance Co. Ltd.
  • Kotak Mahindra life insurance Co. Ltd.
  • Life insurance corporation of India
  • Max life insurance Co. Ltd.
  • SBI life insurance Co. Ltd.
  • Star union Dai-Chi life insurance Co. Ltd.
  • Tata AIA life insurance Co. Ltd.

Salient Features of Annuities in NPS

When it comes to annuity in NPS, several things make it a point of discussion. Some like the annuity scheme, while others are against it. But, it is crucial to know all the facets of annuities before jumping on the 'annuities in NPS is not attractive.' 

Here are some of the features of annuities that one should know of:

  • The minimum amount from a corpus that needs to be invested is 40 per cent.
  • In case one wants to surrender before reaching the age of 60, they will have to use 80 per cent of the corpus to get the annuity scheme.
  • The annuities are provided by the annuity service providers who are empanelled with PFRDA. 
  • There are five types of annuity plans that one can invest in.
  • Annuity for life for the subscriber.
  • Annuity for the life of the subscriber and then to the spouse after the death of the subscriber. 
  • Annuity for life and purchase price returned after the death of the subscriber. 
  • Annuity for the subscriber's life and the spouse and purchase price returned after the death of the spouse/survivor.
  • Annuity for the subscriber's life, then to the spouse, dependent mother, dependent father, and then the purchase price is returned to the subscriber's child or nominee. 
  • The annuity earnings are taxable, and the corpus lump sum is tax-free. 

Core Benefits of Annuity in NPS

Many people think that it is not helpful or simply a deterrent in getting the entire corpus at retirement when it comes to an annuity. They think that instead of getting the 100 per cent lump sum at retirement, they will get 60 per cent only. And, the rest 40 per cent, will be given out as monthly income, which is not a feasible option. 

However, it is seen that annuity in NPS can be a blessing for many retirees. Let’s see how the annuity scheme in the national pension scheme can help the retirees:

  1. Better Money Management

    Many do not understand the fact that several retirees are not that savvy with handling large sums of money. They tend to be low on financial knowledge and cannot use the corpus for a regular and steady income after retirement. It leads to mishandling of such a large amount. Also, some agents will always make a retiree spend their money in places that are not profitable. 

    It is one of the biggest reasons why NPS has mandated the purchase of an annuity scheme using 40 per cent of corpus. It will provide a sense of stability with its steady monthly income for the rest of its life. The risk of going out of money due to bad investments is now lowered significantly. 

  2. No Reinvestment Risk

    Having a steady income after one retires can be a great thing for many retirees. It can be promised by annuity in NPS. It is because, unlike other short-term schemes, annuities have a steady rate of interest on reinvestment. It means that the reinvestment risk on annuities is eliminated. 

  3. No Cap Investment

    Many retirements and other short-term investment scheme for retirees tend to have a specific investment cap. That is, one cannot invest more than that maximum limit. But, the annuity in NPS does not have such an investment cap. It means one can invest even larger sums of money in annuities for better returns. 

  4. Taxability is Not a Big Issue

    Lastly, one most significant sore point regarding annuity in NPS is its taxability. 60 per cent corpus is not taxable, but the annuity earnings are taxable, making one stay away from NPS altogether. But, if one looks at the bigger picture, one will realize that the tax disadvantage is much smaller than the overall annuity advantage.

    Usually, the post-retirement income of retirees is low, and on top of that annuity, earnings are usually not too high to fall in the tax bracket. Even if the earnings can be taxed, the tax percentage will be significantly low. It means, many retirees may not have to pay the taxes, and even if they have, the tax will not be too high. So, all in all, the taxability of the annuity earnings is not something that should be a deterrent for one to invest in NPS.


  • Q1. What are the different investment choices provided to subscribers in NPS?

    A1. For the subscribers of NPS, there are two choices when it comes to investments. As soon as they choose their fund manager, they have to decide on the investment choice. Investment choice can be either active or auto. Auto investment means the funds will be invested automatically in various asset classes in a pre-defined manner, as per the age of the subscriber. In the active investment option, the subscriber can choose how much funds are to be allocated into different asset classes. 
  • Q2. What are the various asset classes in which the funds are invested in NPS?

    A2. Under NPS, there are 4 different asset classes in which the funds are invested. Each of these asset classes has a different return and risk value. One can divide the funds as per their risk appetite. 4 of the asset classes are:
    Government securities or asset class G: this is a low-risk asset class with a low return value. Invests in government securities.
    Corporate debt or asset class C: this is a medium-risk asset class with a medium return value. Invests in fixed income instruments.
    Equity or asset class A: this is a high-risk asset class with a high return value. Invests in the share market.
    Alternative investment funds or asset class A: this category of the asset class can have a variable range of risk and return. This class invests in various instruments like REITs, CMBS, AIFs, MBS, etc. 
  • Q3. What is NPS’s default annuity scheme?

    A3. Under the default annuity scheme, the subscriber and the subscriber's spouse will be given an annuity for life. They will also get the purchase price as per the contract. In case of the death of the subscriber, the annuity scheme will be reissued to the person mentioned in the contract. After the reissued person and the dependent father/mother of the subscriber are covered, the purchase price is returned to the children or legal heir of the subscriber as per contract.
  • Q4. What is the period of payment of annuity in NPS?

    A4. The annuity in NPS is paid in different terms of 5 years, 10 years, 15 years, and 20 years. This is, however, the minimum payable period after this annuity payment is continued till the subscriber is alive. After the death of the subscriber, the purchase price is returned to the person mentioned in the contract. 
  • Q5. Can a subscriber change the annuity plan or annuity service provider later?

    A5. No, the subscriber cannot change the annuity scheme or the ASP after subscribing to the NPS. However, the subscriber can make changes during the free look period of the scheme after contacting the ASP.
Disclaimer: Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by an insurer.
Average Rating
(Based on 0 Reviews)
Sign up for newsletter
Sign up our newsletter and get email about annuity plans.

Pension plans articles

Recent Articles
Popular Articles
A Complete Guide to Choosing Retirement Plans

26 Oct 2021

Retirement planning is a long-term financial goal. People often...
10 Lesser Known Facts About Atal Pension Yojana

20 Oct 2021

Atal Pension Yojana, an Indian Government-backed pension plan...
Can We Withdraw Partial Amount From National Pension Scheme?

20 Oct 2021

National Pension Scheme is a reliable government-backed plan...
Pensions Plans for NRI in India

06 Oct 2021

Most of us want to have a good standard of living in our golden...
Step-By-Step Approach to Retirement Planning

08 Sep 2021

Nowadays, retirement planning is important and it has been...
National Pension Scheme (NPS)
National Pension Scheme (NPS) is an investment cum pension plan launched by the Indian Government. This scheme is...
NPS Calculator: National Pension Scheme Calculator Online
National Pension Scheme Calculator is an online tool, which allows the individual to calculate the estimated...
EPF v/s VPF v/s PPF: Which One is Better
Retirement planning has become the most talked about topic among people as young as 25. With so many investment...
Best Pension Plans in 2019-20
English Hindi   If you are planning a secure retirement then investing in a good pension plan is important. A...
LIC Senior Citizen Pension Scheme
Post demonetization the banks are cutting down the interest rates on fixed deposits. Hence, to safeguard the...

Annuity in NPS Reviews & Ratings

0 / 5 (Based on 31 Reviews)
(Showing Newest 25 reviews)
Chennai , October 26, 2021
Great features
I have got day care hospitalization feature under the mediclaim policy which i have purchased from the policybazaar. It offered me lifelong renewability Cover. It includes tax exemption benefits, cashless hospitalization and many other facilities. overall i like my plan.
Kolkata , October 26, 2021
Trustworthy website
I rarely trust the online purchasing because of the possibility of fraud but Policybazaar has built my trust up. I went through the online process when I was taking care health insurance from here and i found this website trustworthy.
Surat, October 26, 2021
Helpful staff
I rarely trust the online purchasing because of the possibility of fraud but Policybazaar has built my trust up. I went through the online process when I was taking care health insurance from here and i found this website trustworthy.
Pune, October 26, 2021
Low cost plan
Such a simple and easy process to buy a policy was provided to me by Policybazaar. Someone suggested me to check the health plans on Policybazaar website. i went through a lot of plans and i found the right plan here. i bought star health insurance at low cost.
Jaipur, October 26, 2021
Good Coverage
I have bought Bajaj Allianz Health Insurance for my family and by taking a health plan, I have secured my entire family. I have got coverage against medical expenses and buying my policy online has saved my money as I did not have to pay agent fees.
Lucknow, October 26, 2021
Affordable plan
A friend of mine told me about Policybazaar. He said that he has found an affordable health plan deal in Policybazaar. I went to Policybazaar to buy the same plan. I wanted a family health plan so I took Aditya Birla health insurance and it has covered every member of my family.
Kanpur, October 26, 2021
Easy to compare
Last week i went to Policybazaar for taking health plan for my family. An executive explained the policy very well and showed me various plans out of which i chose digit health insurance and it has covered me and my wife.
Nagpur, October 26, 2021
Good plan
I was able to compare the various plans easily on the website of Policybazaar. At first, i was confused about what i should choose as so many options were given there but then i bought sbi general health insurance for my parents. I got really good senior citizen health plan.
Allahabad, October 26, 2021
Hassle free experience
I had an amazing and hassle free experience with policybazaar. Everything has beem very smooth when i was purchasing health insurance from policybazaar. Their team assisted me in well mannered way.
Ranchi, October 26, 2021
Problem resolving
I contacted the customer care of policybazaar as i was facing some difficulty. They just took a minute to solve my problem. I am happy that i have bought my health insurance from the right place. Policybazaar always give proper attention to its customers.
Haora, October 26, 2021
Supportive team
When I was buying my health insurance from the website of Policybazaar, I was a little confused about the policy. I got in touch with the customer care and the executive guided me very well and cleared all my doubts with satisfactory answers. Thanks to Policybazaar for guiding me.
Coimbatore, October 26, 2021
Smooth service
In my health insurance, company is providing me financial assistance. i have got medical coverage against medical expenses arising out of health emergency which i have taken from the Policybazaar. service of policybazaar is very smooth and fast.
Jabalpur, October 26, 2021
Good service
I have bought health insurance through the website of policybazaar. Policybazaar gave me full support and when i contacted the customer care of policybazaar for clearing some of my queries they provided me very good service. Thanks to the Policybazaar for Giving me superb service.
Gwalior, October 26, 2021
Cashless treatment
I have got cashless treatment facility in my health insurance. This will help me to save my savings as I will not have to bear the financial burden of medical expenses. Anyone who is looking for the best and an affordable health plan I would love to recommend Policybazaar to them.
Vijayawada, October 26, 2021
Easy Reimbursement
My experience with Policybazaar has been great. I had taken senior citizen health insurance for my mother from Policybazaar. Last month, she was admitted to the hospital due to a medical emergency. When she got discharged I connected with Policybazaar for reimbursement of hospital bills and I got it immediately
Jodhpur, October 26, 2021
No claim bonus
Policybazaar is totally worthy place to buy any kind of plan. I have been using senior citizen health insurance for a long time which i had take for my parents. I never raised the claim request so i got discount on the premium rate when i was renewing the plan.
Madurai, October 26, 2021
Add on cover
I am using senior citizen health insurance since last year which i had taken from the policybazaar and recently i have customized my health plan with add on cover and added some additional features to it which i got at an affordable rate.
Raipur, October 26, 2021
Low premium
I have taken senior citizen health insurance for my parents. It has Coverage against medical expenses. Pre hospitalization, post hospitalization expenses features are covered under the plan. It has low premium rate and covered huge number of benefits.
Kota, October 26, 2021
Easy Reimbursement
I got reimbursement in hospital bills. I bought senior citizen health insurance for my mother from Policybazaar and a month back she faced some medical problems. I connected with policybazaar for reimbursement and i got it without any hassle.
Guwahati, October 26, 2021
Pocket friendly plan
I was looking for senior citizen health insurance for a long time which I wanted to take for my father. A relative of mine suggested me the Policybazaar website. I landed to their website and checked the health plans. In the end I finally found one that came within my budget.
Chandigarh, October 26, 2021
Affordable plan
I was looking for family health insurance for a long time. I searched a lot on Google and finally found the website of policybazaar. Here i got family health insurance according to my budget and needs. I really liked the service provided by the Policybazaar.
Solapur, October 26, 2021
High coverage
I have secured my family with the help of family health insurance which i have purchased from Policybazaar. In my health plan, i have got coverage for medical expenses. From now on i do not have to bear financial burden as my policy will give me financial protection.
Hubli And Dharwad, October 26, 2021
Good in customer handling
Policybazaar is very good in terms of handling customers. I bought family health insurance from Policybazaar and their team maintained professionalism with courteous demeanor which was absolutely impressive. I would definitely like to get in touch with Policybazaar for more plans.
Bareilly, October 26, 2021
Minimal paperwork
In my family health insurance, every member of my family are covered. there was minimal and Hassle free paperwork. I got high number of coverage and benefits under my plan. the team of policybazaar guided me and helped me to select the suitable plan.
Moradabad, October 26, 2021
Faster claim settlement
Thankfully I had taken family health insurance from Policybazaar. a while ago, i had to admitted my father to the hospital due to sudden medical emergency. i had claimed and got the claim very easily and quickly. I got faster claim settlement. I am happy with the service.
Download the Policybazaar app
to manage all your insurance needs.