Good news for National Pension Scheme (NPS) subscribers. The Central Government has increased the pension withdrawal limit. The limit has been extended from Rs 2 lakh to Rs 5 lakh. It allows members to withdraw a lump sum of Rs. 5 lakhs or less without any conditions. To this end, the Pension Fund Regulatory and Development Authority has amended the rules. Amended these rules with the aim of making NPS a more profitable way for investors.
If the funds in the subscriber’s permanent retirement account are Rs. 5 lakhs or less or up to the limit specified by the Authority.
The subscriber will be able to withdraw this entire pension fund without having to buy annuities. However, those who choose this option will lose the right to a pension under the National Pension Scheme. The latest rules state that they will not be able to receive any pension or any other amount from the government or the employer.
Previously, those with a pension corpus of up to Rs 2 lakh could have withdrawn the amount without investing in annuity schemes. If Rs. If the amount is above 2 lakhs .. only 20 per cent of it could have been withdrawn. The rest of the subscriber’s permanent account is allocated to annuities. Following the latest rules, members of the Corpus Fund up to Rs 5 lakh can withdraw all the funds in the account without purchasing any annuities. Financial experts say this provision will facilitate the retirement process.
The availability of this money in the second phase of Corona is a big blow to subscribers. Financial advisers believe that this is a good opportunity for subscribers with very low corpus to exit NPS faster. With the latest decision the money will be available in a timely manner to the victims in difficult situations like Kovid. The government is happy to take this step at a time when liquidity is limited due to the corona epidemic. In addition, the maximum age limit for joining NPS has been raised from 65 to 70. The exit age limit from the scheme has also been raised to 75 years.
NPS Withdrawal Rules
Partial withdrawals are allowed after the completion of three years by members enrolled in the National Pension Scheme. This is three times the total amount of their retirement .. Up to 25 percent of the amount they have the option to withdraw. However, the reasons for these differences must be shown. Possibility to partially withdraw funds for children’s higher education, child marriages, home purchase / construction (under specified circumstances), medical expenses. There is no tax on these withdrawals.
