NPS Death Benefits Explained: Rules, Payouts, and Process

What Happens to NPS on a Subscriber’s Death?

In the unfortunate event of a subscriber's demise, the entire accumulated corpus in the NPS account is payable to the nominee or legal heir. However, the exact rules differ based on:

• Whether the subscriber was in the government or the private sector.
• Whether the subscriber died before or after the age of 60.
• The amount accumulated in the account.

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Death Benefits for Different Types of Subscribers

1. Government Sector Subscribers (Joined NPS between 18–60 years)

   Condition	Rules
   Corpus ≤ ₹5.00 lakh	The entire amount can be withdrawn as a lump sum by the nominee/legal heir.
   Corpus > ₹5.00 lakh	80% must be used to buy an annuity for a dependent family (spouse, mother, or father). The remaining 20% is paid as a lump sum.
   No dependent family (spouse, mother, father deceased)	80% corpus goes to the surviving children/legal heir, 20% is paid as a lump sum.

2. Non-Government Sector Subscribers (Joined NPS between 18–60 years)

   • The entire corpus is payable as a lump sum to the nominee or legal heir.
   • No annuity purchase requirement, regardless of corpus size.

3. Subscribers Who Joined NPS After Age 60 (All Categories)

   • No limit on withdrawal.
   • The entire accumulated corpus is paid as a lump sum to the nominee or legal heir.

Process To Claim NPS Death Benefits

Here’s how to claim the benefits step-by-step:

• Inform the NPS Central Recordkeeping Agency (CRA) or the nearest Point of Presence (PoP).
• Submit the claim form(available at the NPS website) along with the required documents.
• Verification is carried out by the CRA or NPS Trust.
• On successful verification, the funds are released to the nominee or the legal heir’s bank account.
• For any support, queries can be directed to dept-exit@npstrust.org.in

Documents Required for NPS Death Benefits

To claim NPS death benefits, the nominee/legal heir will need to submit:

• Death certificate of the subscriber
• Subscriber's PRAN (Permanent Retirement Account Number)
• Identity and address proof of the nominee/legal heir
• Bank account details for fund transfer
• Legal heir certificate (if the nominee is not available or registered)

Who Can Claim NPS Death Benefits?

• The nominee mentioned in the NPS account has the first right to claim.
• If no nominee is registered, the legal heir (as per succession laws) can claim the amount.

It’s important for subscribers to regularly update nominee details to avoid disputes or delays.

Tax Benefits for NPS Contributions

NPS is a tax-saving investment that provides specific deductions for contributions made to the scheme. These are covered under Sections 80CCD(1), 80CCD(1B), and 80CCD(2).

Example: Let’s say Meena, a 40-year-old salaried professional, invests in the National Pension Scheme:

• Salary (Basic + DA): ₹10,00,000
• Self-contribution: ₹1,50,000
• Additional NPS contribution: ₹50,000
• Employer contribution: ₹1,00,000 (10%)

Tax Benefits Availed:

• ₹1.5 lakh under Section 80CCD(1)
• ₹50,000 under Section 80CCD(1B)
• ₹1 lakh under Section 80CCD(2)

Total tax deduction: ₹3 lakh, enhancing both current savings and future security.

Conclusion

NPS is a type of pension plan that offers structured financial relief to the nominee or legal heir in the event of a subscriber’s demise. With sector-specific rules and a clear claim process, the system is designed for timely and fair disbursement. Keeping nominee details updated is essential to avoid delays. For assistance, reach out to the CRA, PFRDA, or the designated grievance redressal channels.