The government may allow pensioners to withdraw contributions to the NPS with a higher limit.
Retirees must soon contribute their entire lifetime to use their pension fund money to meet their family emergencies or to invest in instruments that provide good returns. Will be allowed to withdraw.
Sources in the government said that the pension regulator, Pension Fund Regulatory and Development Authority (PFRDA) is considering coming up with a better option for customers of the National Pension System (NPS). Under this, they will be able to withdraw all their money at one time if the pension is a corpus of up to 5 lakh rupees.
Currently, there is a limit of 2 lakh rupees, in which an NPS customer can withdraw full money. Beyond this limit, currently only 60 percent of the pension amount can be withdrawn, while 40 percent of the contribution is compulsorily placed in an annuity approved by the government.
Sources said that the plan is to increase the limit to Rs 5 lakh which will provide better liquidity to the customers of a certain segment.
Also, in a fund of Rs 5 lakh, the regular pension amount would be very insignificant to provide any significant income to the shareholders for life.
However, even with the changed withdrawal scheme, PFRDA is expected to provide an option to keep a portion of the pension amount of the customers for investment in annuities or for investment by pension fund managers.
The changes are being considered as a result of an annual average of about 5.5 percent annuity. With inflation and income tax on pension accumulation, the return for annuity to customers falls into negative territory. Will give converted customers broad options to increase returns on their lifetime contribution.
