The National Pension System (NPS) is a long-term retirement plan that provides a lump sum and pension benefits when you retire.
New rules for taking out some money from this pension scheme, managed by the Central Government, will start from February 1.
The Pension Fund Regulatory and Development Authority (PFRDA) issued a notice about these changes on January 12, 2024.
According to the new rules, NPS account holders can take out up to 25% of the amount in their individual pension account, excluding their employer’s contribution.
This option will be available from February 1. Let’s find out when you can make a partial withdrawal, the conditions you need to meet, and the process involved.
When you can withdraw money
1) For your children’s higher education.
2) Up to 25% for your children’s marriage.
3) Buying a house or repaying a home loan, with some conditions.
4) Hospital stay and treatment expenses during serious illnesses.
5) In case of medical incapacitation or disability due to an accident.
6) For hospitalization or treatment in case of a serious illness.
7) Starting a business, a startup, skill development, or a course.
Requirements for partial withdrawal
1) NPS subscribers must be a member for at least three years.
2) You can’t withdraw more than one-fourth of your contribution.
3) You can make withdrawals a maximum of 3 times during your subscription, with a gap of 5 years between each withdrawal.
The total withdrawal should not exceed 25% of your entire contribution.
Withdrawal process
1) Apply to any government NPS office for withdrawing 25% or less.
2) Provide a self-declaration stating the purpose of withdrawal.
3) Submit the application to the Central Recordkeeping Agency (CRA).
4) The agency will process the application after verification.
5) If the subscriber is ill, a family member or nominee can make the request on their behalf.
The National Pension Scheme was launched by the Central Government on January 1, 2004, initially for government employees.
After 2009, private sector employees were also allowed to invest in this scheme.
According to PFRDA, after the age of 60, you can withdraw 60% of the total maturity amount as a lump sum,
and the remaining 40% has to be invested in an annuity plan to receive a pension.
