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Upon retirement, the National Pension System (NPS) allows you to withdraw up to 60 per cent of your corpus tax-free. The remaining 40 per cent must be used to buy an annuity - a fixed monthly income paid for life, irrespective of market movements. Yet, annuity receives less attention than it deserves, even though it directly shapes your financial life after retirement. But that won't be the case today. In this piece, we will examine the various annuity options, how they can be purchased and the entire process. Where to buy an annuity The annuity you need to buy from your NPS corpus must be purchased from an Annuity Service Provider (ASP), which is a life insurance company empanelled with the Pension Fund Regulatory and Development Authority (PFRDA). There are currently 15 such providers, including LIC, HDFC Life, ICICI Prudential and SBI Life. Annuity options NPS offers three annuity variants. The most basic is 'annuity for life', where you receive fixed monthly payments until death. If you wish to continue the income stream for your spouse, you can choose a 'joi
This article was originally published on May 16, 2025.
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