National Pension System (NPS) launched by the Government of India on January 1, 2004. It is a defined contribution based pension scheme, which aims to provide regular income during old age and generates market-based returns over the long term.
Many investors see NPS as a Retirement Product and cannot withdraw in case of any urgency. It may be noted that partial withdrawal benefit is also available in NPS under certain circumstances. Recently PFRDA (Pension Fund Regulatory and Development Authority) 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 10 new rules you should know before withdrawal from NPS Account:
1) Earlier, partial withdrawal from NPS account was allowed after 10 years of subscription. Now a subscriber can go for partial withdrawal from NPS Account after completion of 3 years of subscription.
2) One can do a maximum of three partial withdrawals during his entire tenure of subscription under NPS.
3) The Subscribers can withdraw maximum 25 percent of the contributions made by him or her as on the date of application for partial withdrawal.
4) You can do the Partial withdrawal for specific purposes like higher education of children, self, the marriage of children, purchase or construction of house and treatment of critical illness.
5) You can submit Partial withdrawal request 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 percent 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 percent 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 premature exit, at least 80 percent of the accumulated corpus utilized for the purchase of an annuity. If the total corpus is less than Rs 1 lakh, then the subscriber can withdraw 100 percent of the corpus.
8) In case of death of the subscriber, the entire accumulated corpus paid to the nominee of the subscriber.
9) A subscriber can check the status of withdrawal request online through the CRA website.
10) The withdrawal proceeds are credit in subscriber bank account through electronic mode only.
