The PFRDA has released a new circular clarifying the specific circumstances under which annuity policies may be surrendered. While a previous restriction from October 2024 sought to ensure long-term income security, these new relaxations address hardships faced by policyholders.

Permissible Cases for Surrender

Surrender of annuity policies is now permitted in the following specific scenarios:

• Critical Illness: In cases where the annuitant or their family members are diagnosed with a critical illness. This is subject to the standard assessment and policies of the Annuity Service Provider (ASP).
• Existing Policy Clauses: Policies issued prior to October 24, 2024, that contain an explicit surrender clause within the original policy document.

Procedural Requirements for ASPs

To protect subscriber interests, Annuity Service Providers must follow a strict transparency protocol:

1. Detailed Disclosure: Before processing a request, the ASP must provide the annuitant with a written breakdown of the final amount to be transferred, including all applicable taxes and charges.
2. Explicit Consent: A surrender can only be finalized after the annuitant provides clear written consent regarding the final proceeds.
3. Payment Remittance: Once consent is received, the value is remitted directly to the annuitant’s bank account.
4. Regulatory Reporting: ASPs must inform the Central Recordkeeping Agency (CRA) within 7 working days and include these cases in their monthly reports to PFRDA.

Note: All other terms from the October 2024 circular remain in full effect.