Exit from NPS for State Government Sector (SG) and State Autonomous Bodies – FAQ

However, eligibility & terms of Voluntary retirement are defined/governed by service rules and regulations of the respective organization.

Minimum Annuitisation-80% of accumulated wealth.

Maximum Lump sum withdrawal – 20% of accumulated wealth.

If the accumulated pension wealth of the subscriber is equal to or less than one lakh rupees or a limit to be Specified by the Authority, such subscriber shall have the option to withdraw the entire accumulated pension wealth without purchasing any annuity.

Minimum Annuitisation – 40% of Accumulated wealth.

Maximum Lump Sum Withdrawal – 60% of Accumulated wealth.

The subscriber may choose to purchase an annuity for an amount greater than 40 percent also.

if the accumulated pension wealth of the subscriber is equal to or less than two lakh rupees, or a limit to be specified by the Authority, such subscriber shall have the option to withdraw the entire accumulated pension wealth without purchasing any annuity.

If the family member opts for family pension as per state notification/circular/OM, as per regulations all the accumulated wealth shall be transferred to the bank account of the nodal office for further settlement as per government directives.

However, where provision of family pension is not available, exit regulations as follows shall be applicable.

Minimum Annuitisation-80% of accumulated wealth.

Maximum Lump sum Withdrawal – 20% of accumulated wealth.

If the accumulated pension wealth of the subscriber is equal to or less than two lakh rupees, or a limit to be specified by the Authority, such nominees/legal heirs shall have the option to withdrawn the entire accumulated pension wealth without purchasing any annuity.

The lump sum can be deferred till the age of 70 years which can be withdrawn at any time between superannuation and 70 years of age or every year till age of 70 years. The subscriber has to give in writing (intimation to the employer) in the specified at least fifteen days before the attainment of age of superannuation and same should be authorized by the associated Nodal office in the CRA system. If deferment is availed by the subscriber, subscriber has to bear the maintenance charges like PoP,CRA,PFM etc.

Annuity purchase can also be deferred for maximum period of 3 years. The subscriber has to give in writing (intimation to the employer) at least fifteen days before the attainment of age of superannuation and same should be authorized by the associated Nodal Office in the CRA system.

If the death of the subscriber occurs before such due date of purchase of an annuity after the deferment,the annuity shall mandatorily be purchased by the spouse.

In such scenario,subscriber has to shift his/her PRAN to any POP or e-NPS.Nodal office shall not assist in uploading of contribution after the date of superannuation. Subscriber has to operate account in his/her individual capacity only.

Such option shall be exercised at least fifteen days prior to the age of attaining sixty years or age or superannuation, as the case may be, and same should be authorized by the associated Nodal office in the CRA system.

Subscriber has to bear the maintenance charges like PoP,CRA,PFM etc.

A subscriber can contribute to his Tier 2 account till the time he has an active Tier 1 Account.

a) Default scheme: Annuity for life of the subscriber and his or her spouse (if any) with provision for return of purchase price of the annuity- after the demise of such subscriber, the annuity will be re-issued to the family members in the order specified hereunder:

(a) living dependent mother

(b) living dependent father.

After the coverage of all the family members specified above, the purchase price shall be returned to the subscriber and in the absence of children, the legal heirs of the subscriber, as may be applicable.

If subscriber does not want to purchase default annuity scheme, he may choose any of the following schemers:

(b) Annuity for life with return of purchase price (amount given to annuity service provider) on death – Employee shall get annuity (monthly pension)till he/she is alive and payment of annuity ceases on the death and the purchase price is returned to the nominee.

(c) Annuity guaranteed for 5,10,15 or 20 years and for life thereafter

* On death during the guarantee period – Employee shall get annuity and after his/her death during the guaranteed period, annuity is paid to the nominee till the end of the guaranteed period after which the same ceases and no return of purchase price to the nominee.

* On death after the guarantee period – Employee shall get payment of annuity till he/she is alive even after the guaranteed period and annuity ceases after his/her death and no return of purchase price to nominee.

d) Annuity for life – Employee shall get payment of annuity till he/she is alive & payment of annuity ceases on death and no return of purchases price to nominee.

e) Annuity for life increasing at simple rate of 3% p.a Employee shall get payment of annuity till he/she is alive & payment of annuity ceases on death and no return of purchase price to nominee.

f) Annuity for life with a provision for 50% of the annuity to the spouse of the annuitant for life on death of the annuitant – Payment of annuity ceases on death of subscriber and 50% of the annuity is paid to the surviving named spouse during his/her life time. If the spouse predeceases the annuitant, payment of annuity will cease after the death of the annuitant. It can be with or without return of purchase price.

g)Annuity for life with a provision of 100% of the annuity payable to spouse during his/her lifetime on death of the annuitant – payment of annuity ceases after death of the annuitant and full annuity is payable to the surviving named spouse during his/her life time. If the spouse predeceases the annuitant, the annuity ceases after death of the annuitant. It can be with or without return of purchase price.

subscriber can also add spouse in any of the variants (other than default) above.

All ASPs may not provide all the variants. It may vary from ASP to ASP.

Pricing of annuity also varies ASP to ASP.

1. Life Insurance Corporation of India
2. SBI Life Insurance Co. Ltd
3. ICICI Prudential Life Insurance Co.Ltd
4. HDFC Standard Life Insurance Co Ltd
5. Star Union Dai-ichi Life Insurance Co Ltd
   * Subject to change from time to time.

A subscriber is allowed to withdraw only three times during the entire tenure of service.

1. NPS subscriber for atleast 3 years.

2. withdrawal is allowed for some specific purposes only.

a) For the higher education of children

b) For the marriage of Children

c) For the purchase/construction of residential house or flat in his or her own name or in a joint name with his or her legally wedded spouse in case, the subscriber already owns either individually or in the joint name a residential house or flat, other than ancestral property, no withdrawal under these regulations shall be permitted.

d) Treatment for prescribed illnesses – suffered by subscriber his legally wedded spouse, children including a legally adopted child and dependent parents.

Prescribed illnesses includes:

(i) Cancer

(ii) Kidney Failure (End Stage Renal Failure)

(iii) Primary pulmonary Arterial Hypertension

(iv) Multiple Sclerosis

(v) Major Organ Transplant

(vi) Coronary Artery Bypass Graft

(vii) Aorta Graft Surgery

(viii) Heart Valve Surgery

(ix) Stroke

(x) Myocardial Infarction

(xi) Coma

(xii) Total blindness

(xiii) Paralysis

(xiv) Accident of serious/life threatening nature

(xv) Any other critical illness of a life threatening nature as stipulated in the circulars, guidelines or notifications issues by the Authority from time to time

Employees own contribution: Eligible for tax deduction under sec 80 CCD (1) of Income Tax Act up to 10% of salary (Basic + DA) within the overall ceiling of Rs.1.50 Lacs under Sec. 80 C of the Income Tax Act. From F.Y.2015-16 subscriber will be allowed tax deduction in addition to the deduction allowed under Sec. 80CCD(1) for contribution in his NPS account subject to maximum of Rs.50,000/- under sec. 80CCD1(B)

Employer’s contribution: Up to 10% of Basic & DA (no upper monetary ceiling) under 80CCD(2). This rebate is over and above 80 C. (this tax benefit is only available for NPS subscribers).

II) Partial Withdrawal: Tax free

III) Lump Sum Withdrawal: In case of superannuation, 40% of lump sum withdrawal is tax free

IV) Annuity: Amount utilized for purchase of annuity is not taxable in the hands of the subscriber.