NPS New Rules: If you are a salaried employee or have a government employee in your family who is benefiting from the NPS scheme, then this news could be very important for you. The Pension Fund Regulatory and Development Authority (PFRDA) has made changes to the NPS rules. In this change, the PFRDA has removed the 5-year investment condition for non-government investors under NPS. This will benefit those who want to exit the NPS scheme midway for any reason. However, these lock-in conditions will still apply to government employees.
The objective of the PFRDA in making this change is to provide more benefits to investors from the private sector before they invest. This new notification does not mention removing the mandatory time limit. It also doesn’t specify any time limit for withdrawing money. It clearly states that investors will be able to withdraw the money in a lump sum.
Withdrawal facility up to Rs. 8 lakh
If the investor’s total accumulated pension amount is Rs. 8 lakh or less, they will not need to buy an annuity plan. In this case, the entire amount can be withdrawn in a lump sum. If the total amount is more than Rs. 8 lakh and less than Rs. 12 lakh, then Rs. 6 lakh can be withdrawn in a lump sum. The remaining amount will be paid at a fixed time. This new rule will benefit small investors the most.
Investment is possible up to the age of 85
According to the new amendment, investors can now invest until the age of 85. They can also exit the scheme earlier, subject to certain conditions. Generally, withdrawal is possible after completing 15 years of membership, at the age of 60, retirement, or superannuation, whichever comes first.
Relief for these investors
According to the new rules, if any non-government investor has a fund of more than Rs. 12 lakh, they can withdraw 80% of the amount in a lump sum. They only need to leave 20% for the annuity. The remaining amount must be used to purchase an annuity for at least 6 years. This will ensure that investors have more money at their disposal during retirement and can use the funds according to their needs.
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Withdraw the entire amount in these situations
This amendment also provides relief for certain specific circumstances. If an investor relinquishes their citizenship, they can withdraw the entire amount deposited in the NPS in a lump sum. In case of the investor’s death, the deposited amount will be given to the nominee. If the investor goes missing and is presumed dead, 20% of the amount will be provided as relief. Special exemptions will also be granted in case of medical emergencies.