NPS withdrawal latest rules – 10 things you should know
National Pension System (NPS) is a defined contribution based pension scheme launched by the Government of India on January 1, 2004, which aims to provide regular income during old age and generates market-based returns over the long term.
There is a perception among investors that NPS is mainly a retirement product and cannot be withdrawn in case of any urgency. It may be noted that partial withdrawal benefit is also available in NPS under certain circumstances. Recently PFRDA, the pension fund regulator in a circular said that NPS subscribers can also partially withdraw funds from their NPS account for the purpose of higher education or setting up new business.
Here are latest NPS withdrawal rules you should be aware of
1) A subscriber can go for partial withdrawal from his NPS account after completion of three years of subscription. Earlier, partial withdrawal from NPS account was allowed after 10 years of subscription.
2) One can do a maximum of three partial withdrawals during his entire tenure of subscription under NPS.
3) Subscribers are allowed to withdraw maximum 25 per cent of the contributions made by him or her as on the date of application for partial withdrawal.
4) Partial withdrawals are allowed for specific purposes like higher education of children, self, marriage of children, purchase/construction of house and treatment of critical illness.
5) Partial withdrawal request can be submitted either online or offline. However partial withdrawal requests need to be verified and authorized by the associated Point of Presence (POP) corner.
6) In case of superannuation, a subscriber can withdraw 100 per cent of the corpus accumulated in his NPS account if the amount is less than or equal to Rs 2 lakh. If the corpus at the time of superannuation is more than Rs 2 lakh, then the subscriber has to use at least 40 per cent of the accumulated corpus to purchase an annuity.
7) A subscriber can also opt for pre-mature exit from NPS after completion of 10 years. In case of a pre-mature exit, at least 80 per cent of the accumulated corpus has to be utilised for purchase of an annuity. If the total corpus is less than Rs 1 lakh, then the subscriber can withdraw 100 per cent of the corpus.
8) But in case of death of the subscriber, the entire accumulated corpus would be paid to the nominee/legal heir of the subscriber.
9) A subscriber can check the status of withdrawal request online through the CRA website.
10) The withdrawal proceeds are credited in subscriber/claimant bank account (as per the bank details provided at the time of initiating online withdrawal request) through electronic mode only.