PFRDA relaxes annuity surrender rules in defined cases
Annuity Service Providers must process surrenders only under PFRDA’s two exceptions
PFRDA
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Change
PFRDA relaxed annuity surrender restrictions for critical illness cases and for pre-October 24, 2024 annuity policies that contain an explicit surrender clause.
Why it matters
The circular narrows when Annuity Service Providers may process surrender requests that were otherwise restricted under PFRDA’s 2024 circular. ASPs must follow the original policy terms, applicable PFRDA and IRDAI guidelines, written amount disclosure, documented consent, bank-account crediting, CRA reporting and regulator cancellation reporting.
Implications
- — Annuity Service Providers must assess critical-illness surrender requests using their standard process before processing surrender.
- — Annuity Service Providers must allow surrender for policies issued before October 24, 2024 only when the original policy document contains an explicit surrender clause.
- — Annuity Service Providers must disclose the final transferable surrender amount in writing, obtain documented consent, credit proceeds to the annuitant’s bank account and share surrender information with the CRA within seven working days.
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