The Pension Fund Regulatory and Development Authority (PFRDA) on May 14, 2026, issued clarification on permissibility and procedure for surrender of annuity policies in certain cases.
The circular revisits earlier guidelines issued by the Pension Fund Regulatory and Development Authority (PFRDA), which had restricted surrender or cancellation of annuities except during the free-look period, with the objective of ensuring long-term financial security for subscribers. However, representations were received highlighting hardships faced by annuitants, particularly where older annuity policies allowed surrender under specific conditions or where urgent financial needs arose due to critical illness.
After review, PFRDA has decided to relax the surrender restrictions in certain cases to address these concerns. Surrender of annuities is now permitted in cases of critical illness of the annuitant or their family members, subject to assessment by the Annuity Service Provider (ASP). Additionally, annuity policies issued prior to October 24, 2024, that contain explicit surrender clauses will also be allowed to be surrendered in accordance with their original terms.
The surrender process must strictly follow the terms of the policy contract, scheme features, and applicable PFRDA and IRDAI regulations. To ensure transparency and protect subscribers, ASPs are required to clearly communicate the final surrender value, including a detailed breakup of charges and taxes, and obtain explicit written consent from the annuitant before processing the request.
Further, ASPs must remit the surrender proceeds directly to the annuitant’s bank account, report the surrendered annuity details to the Central Recordkeeping Agency (CRA) within seven working days, and include such cases in their monthly reports to the Authority. All other provisions of the earlier circular remain unchanged.
[Circular No: PFRDA/2026/30/SUP-ASP/01]
