The National Pension System (NPS) has been a crucial means of retirement security for millions of people in India. Keeping in mind the evolving needs of investors, the PFRDA (Pension Fund Regulatory and Development Authority) has made significant amendments to the NPS withdrawal and retirement rules. These changes aim to provide greater flexibility in the use of pension funds and simplify retirement planning.
Read More- UIDAI’s Master Plan Revealed: New Aadhaar System to End Fraud, School IDs May Be Invalid Soon
Major Change in Retirement Withdrawal Limit
Until now, according to NPS rules, only 60 percent of the amount could be withdrawn as a lump sum at retirement, while the remaining 40 percent had to be used to purchase an annuity for a pension. With the implementation of the revised rules, non-government NPS account holders will be able to withdraw up to 80 percent of their total pension fund as a lump sum. Now, only 20 percent of the amount will be mandatory for purchasing an annuity. This will give investors more freedom to use their retirement funds according to their needs, expenses, and investment plans.
Loan Option Now Available on NPS Account
Another significant change in the new rules is that the NPS account can now be presented as collateral to financial institutions. This means that account holders will be able to avail loans or financial assistance up to a limited extent based on their NPS deposits. Although this facility will be subject to the terms and conditions of the lending institution and regulatory guidelines, it will give NPS a new identity as a robust financial instrument.
Maximum Withdrawal Age Limit Increased to 85 Years
The PFRDA has increased the maximum age limit for withdrawal from NPS to 85 years. Previously, this limit was set at 70 years. This change will benefit investors who wish to continue investing for a longer period or want to defer their withdrawals to later years. This will help senior citizens with better financial planning.
Permission to Withdraw the Entire Amount Up to Eight Lakh Rupees
According to the revised rules, if an NPS account holder’s total pension fund is less than Rs. 8 lakh, they can withdraw the entire amount as a lump sum. Investors are also given the option to receive this amount through systematic withdrawals or other approved methods. This will provide greater convenience to small investors at the time of retirement.
Additional relaxation in partial withdrawal rules
The rules for partial withdrawals for NPS account holders have also been simplified. Investors can now make partial withdrawals four times, compared to the previous limit of three times. A minimum gap of four years between each withdrawal will be mandatory. However, after the age of 60, the facility of three partial withdrawals is available, with a minimum gap of three years required between each withdrawal.
Separate rules apply to government employees
Some different provisions have been made in the NPS rules for government employees. They can remain in the NPS until the age of 85, but at the time of retirement, they can withdraw only 60 percent of the amount. It will be mandatory to purchase an annuity with the remaining 40 percent. In case of premature termination of service or resignation, 80 percent of the amount will be given as an annuity and only 20 percent as a lump-sum withdrawal.
Read More- Redmi Note 14 Pro Available At Rs 11000 Discount on Flipkart—See New MRP!
All categories of investors will benefit
According to the PFRDA, these revised rules will apply to all categories of account holders, including government, non-government, and NPS Lite. These rules will be considered effective from the date of publication of the notification in the Gazette. The regulator believes that these changes will further strengthen the confidence of NPS investors and that this scheme will emerge as a more effective retirement solution in the future.