Pension Fund Regulatory and Development Authority (PFRDA) has introduced new rules for withdrawal under the National Pension System, which will be implemented from February 1, 2024.
Pension Fund Regulatory and Development Authority (PFRDA) has introduced new rules for withdrawal under the National Pension System, which will be implemented from February 1, 2024. According to this, if there is already a house in your name, then partial withdrawal from the NPS account will not be allowed for it.
NPS is a long term pension scheme, which provides the benefit of lump sum amount and pension on retirement. Under this, huge corpus can be generated on retirement. The amount of corpus made will depend on how much and for how long you have invested. For this reason, some strict rules have been made for early withdrawal. For treatment of serious illness, partial withdrawal can be made from the NPS account only three times during the entire tenure. It is necessary to have a gap of 5-5 years during all the three partial withdrawals. This withdrawal will not exceed 25 percent of your entire contribution.
Partial withdrawal can be done only for certain purposes. PFRDA has recently made a new change regarding partial withdrawal under NPS account. According to Bank Bazaar CEO Adil Shetty, originally it was possible for customers to make partial withdrawals to buy or construct a house in their own name or jointly with their spouse. But now this rule itself has been changed. Earlier, there was a facility of partial withdrawal for buying or constructing another house despite owning one house. But now if you already have a house, which is in your or your wife’s name, then you will not be able to avail the benefit of partial withdrawal from NPS to buy another house.
The reason behind this is that it is a retirement plan and it should be used for specific needs. The amount invested in this should not be used for other investments, due to which PFRDA has changed the rule. There is already a rule for partial withdrawal of up to 25 percent of the total contribution from the NPS account.
When can the amount be partially withdrawn?
- If the customer wants to spend for the higher education of children then the amount can be withdrawn.
- This amount can also be withdrawn for the marriage of children.
- You can also withdraw funds for home purchase, home loan repayment and others.
- This amount can also be withdrawn for serious illness, treatment and other medical expenses.
- Even in case of any emergency, up to 25 percent of the amount can be withdrawn.
- This amount can also be used to start any kind of business or startup.
Other conditions regarding partial withdrawal
- The subscriber must be a member for three years from the time the account is opened.
- More than 25 percent cannot be partially withdrawn from this account.
- NPS account holders are allowed to make partial withdrawals from the account only a maximum of three times.
How can I withdraw money?
If 25 percent or less amount is to be withdrawn under NPS, then the representative of the Central Recordkeeping Agency (CRA) can make a withdrawal request through the government nodal officer. In this, the reason for withdrawal and other details will have to be given. If the subscriber is ill, a family member or nominee can make this request in his place.
It is noteworthy that according to the Pension Fund Regulatory and Development Authority (PFRDA), after the age of 60 years (retirement), it is allowed to withdraw 60 percent of the total maturity amount in lump sum from NPS, which is tax-free. The remaining 40 percent of the maturity amount One has to invest in an annuity plan, from which one gets pension. The amount invested in annuity is tax-free, but there is no tax exemption on the pension amount received as return under annuity.
