National Pension System (NPS): Withdrawal Rules Explained

Standard long-term funding plan for retirement – the Nationwide Pension System (NPS) permits untimely withdrawal and even exit below sure circumstances. Whereas, a Tier-1 account permits the subscriber to make a untimely withdrawal and even exit below sure circumstances, a Tier II account affords higher flexibility when it comes to withdrawal, because it allows the subscriber to withdraw funds any time with none restrictions.

Underneath the NPS, an exit is outlined as closure of particular person pension account of the subscriber. NPS additionally permits partial withdrawal from the necessary Tier-I account below sure circumstances, in accordance with the Nationwide Securities Depository Restricted (NSDL) – the central report conserving company for the Nationwide Pension System. This is all it’s worthwhile to know concerning the exit/withdrawal guidelines of the NPS:

Exit/withdrawal rule of NPS:

• For withdrawal earlier than attaining 60 years of age, a minimum of 80 per cent of the collected pension wealth of the subscriber needs to be utilized for buy of an annuity, offering the month-to-month pension to the subscriber and the stability is paid as a lump sum to the subscriber, in accordance with NSDL.
• If the full collected corpus within the NPS account is lower than Rs 2 lakh, the subscriber can go for a 100 per cent lump sum withdrawal, upon attaining 60 years of age. In different instances, a minimum of 40 per cent of the collected corpus must be utilized for the acquisition of an annuity scheme, offering a month-to-month pension to the subscriber. On this case, the rest is paid as lump sum to the subscriber.
• In case of demise of the subscriber, the nominee will get the choice to obtain 100 per cent of the NPS corpus in lump sum. The nominee can even select to proceed with the NPS account, by subscribing to NPS individually after following due KYC (know your buyer) process, in accordance with NSDL web site.