Is the purchase of an annuity mandatory?

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The purchase of an annuity is mandatory when one exits from the NPS. The aim is to provide regular income as a pension to the subscriber by investing in annuity plans. As per the rules, one needs to invest a certain percentage of the corpus amount towards the purchase of an annuity as per below:

  • Minimum 40%, in case of an exit at the age of 60 years; and
  • Minimum 80% in case of an early exit before the age of 60 years.

One can defer the purchase of an annuity for a period of 3 years but cannot avoid it. The purchasing of an annuity is optional in case of the death of the subscriber.


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