The National Pension System (NPS) is a retirement savings and investment scheme launched by the government to offer citizens of India security as they age. It offers a convenient way to efficiently organise your long-term savings with a secure, regulated market-based return.
According to the PFRDA website, the broad aims of investing in NPS are as follows:
- Provide a retirement income
- Long-term, reasonable market-based returns
- Providing all citizens with access to old age security
- NPS withdrawal requirements varies and are specified differently for different types of citizens.
According to the website, these are the rules for government and corporate employees on retirement from NPS:
- The individual needs to invest a minimum of 40% of the accumulated corpus in annuity while enjoying the option to withdraw the rest of the amount in a lumpsum
- The individual has the option to defer withdrawing the lumpsum until they have reached 70 years of age
- If the accumulated pension is less than Rs 2 lakh, the individual has the freedom to withdraw the entire amount
NPS withdrawal rules for government employees taking voluntary retirement:
- The individual has to invest a minimum of 80% of the amount in an annuity
- If the pension accumulated is less than Rs 1 lakh, the individual has the freedom to withdraw the entire amount
NPS withdrawal rules in case of death of government and corporate employee:
- In the event of the death of a government employee before retirement age, the entire amount is handed over to the nominee/legal heir
NPS withdrawal rules for corporate employees and citizens on voluntary exit:
- The individual must have stayed invested in his account for 10 years
- As much as 80% of the amount must be used to purchase an annuity
- If the amount accumulated is less than Rs 1 lakh, then withdrawal of the entire amount is permitted
Here are important FAQs related withdrawal process, according to the NPS website.
1 Where shall I find the withdrawal forms? What are the different types of Withdrawal Forms?
You can find the withdrawal form of respective sector from “Form” section available on this website. Based on the different types of Withdrawal request, following forms are made available:
2. How can I initiate the Withdrawal request in CRA system?
Subscriber can initiate Online Withdrawal request through their NPS account log-in. Such request needs to be verified and authorized by the associated POP. In case Subscriber is not able to initiate online Withdrawal request, he or she needs to submit the physical Withdrawal form along with the required documents to the POP. Based on Subscriber’s request, POP will initiate the online Withdrawal request on behalf of the Subscriber.
For details of steps to be followed, you may go through the “Self running Demo” of “withdrawal process for Non-Government Subscriber” available in “Knowledge Centre” section under “Subscriber Corner” on this website.
3 Can I withdraw some amount during my tenure in NPS and still continue to subscriber to my NPS Account?
Yes, NPS Subscriber can withdraw certain amount out of his own contribution. It is considered as partial withdrawal under NPS, for Conditions of partial Withdrawal0.
4 How does the Subscriber/Claimant receive the Withdrawal proceeds?
The Withdrawal proceeds are credited in Subscriber/Claimant bank account (as per the bank details provided at the time of initiating online Withdrawal request) through electronic mode only.
5 How Subscriber can check the status of Withdrawal request?
Subscriber can check Withdrawal status as per below mentioned option:
- Subscriber can check through the ‘Limited Access View’ (Pre Login) functionality which is available at home page of CRA website (www.cra-nsdl.com).
- Subscriber can also check the status under the menu ‘Exit Withdrawal Request’>>’Withdrawal Request Status View’ through their NPS account log-in.
6 Can a Subscriber withdraw lump sum amount in phased manner?
Facility of phased Withdrawal is available for NPS Subscribers. Subscriber can opt for withdrawal of lump-sum amount in a phased manner (up to 10 instalments) over the period from 60 years (or any other retirement age as prescribed by the employer) to 75 years. However, Subscriber has to buy Annuity prior to Phased Withdrawal.
7 What will happen to my Tier II contribution, in case closure of Tier I account?
Your Tier II account will also close once you request for closure of Tier I account. Units under Tier II account will be redeemed and amount will be transferred to your given bank account.
8 Can I claim 100% Withdrawal in case of Superannuation and Pre-mature Exit?
Yes, a subscriber can claim withdrawal in following cases:
- In case of Superannuation- A Subscriber can claim 100% Withdrawal if the total accumulated corpus is less than or equal to Rs. 5 lakh at the time of Superannuation/attaining age of 60 years.
- In case of Pre-mature Exit- If total accumulated corpus is less thanor equal to Rs. 2.5 lakh, the Subscriber can avail the option of complete Withdrawal. However, you can exit from NPS only after completion of 5 years.