NPS withdrawal rules explained: Key things you must know

NPS subscribers must understand the withdrawal rules associated with these accounts to help them plan their retirement strategy.

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NPS subscribers can withdraw a maximum of 60% of the accumulated corpus in the Tier 1 account as a lump sum at the time of retirement. The remaining 40% has to be mandatorily used to purchase an annuity that provides a regular pension income. This provides a corpus to the retired individual to be used as per his financial plan.

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If the NPS subscriber faces specific financial emergencies, the NPS allows partial withdrawals, subject to specific terms and conditions. Subscribers can make premature withdrawals of up to 25% of their contributions. However, this is possible only if 10 years have been completed since the opening of the account.

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The mandatory purchase of an annuity with at least 40% of the accumulated corpus ensures a regular pension income for the investor during their retirement years. This aims to provide financial security in retired life.
(Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of www.economictimes.com.)

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