NPS Exit Rules: No More Waiting Until 60, Withdrawals From NPS Now Easier

NPS Exit Rules: Good news for National Pension System (NPS) subscribers. Pension regulator PFRDA has simplified the rules for withdrawing funds from NPS. This change has been made under the “All Citizen Model,” allowing subscribers to easily access their investments.

Public interest will increase

The new rules have been designed with non-government sector subscribers in mind. The same rules will now apply to common schemes and multiple scheme frameworks (MSFs). This is likely to increase the number of NPS investors.

Five-Year Lock-In Removed

The biggest change is that the minimum five-year lock-in period will no longer be in place. Previously, subscribers were required to invest for at least five years to exit the scheme. Now, they can withdraw their funds even before five years if needed.

Vesting Period Rules Simplified

Vesting period rules have also been simplified. Subscribers can now exit the scheme after 15 years or at age 60, whichever is earlier. For corporate sector subscribers, the rules remain the same, meaning they will have to wait until retirement age.

Lump-sum withdrawal limit increased

For normal exit, subscribers can now withdraw up to 80% of their corpus in one lump sum. Previously, this limit was 60%. The minimum amount for purchasing an annuity has also been reduced from 40% to 20%, ensuring more funds in hand upon retirement.

Facility to withdraw up to 80%

According to Pranay Ranjan Dwivedi, MD and CEO of SBI Pension Funds, subscribers can now withdraw up to 80% of their corpus. 60% of this amount will be completely tax-free. The remaining 20% will have to be used to purchase an annuity. If the subscriber passes away, the nominee will have the option to withdraw the entire corpus in one lump sum.