New NPS Rules: Withdraw Your Money Before 60, Know the rules

NPS Exit Rules: Great news for subscribers of the National Pension System (NPS)! The pension regulator PFRDA has made the NPS exit rules simpler. They have revised the regulations under the all-citizen model, making it easier for NPS subscribers to access their funds.

This change is expected to boost the interest of the general public in NPS

PFRDA has implemented this update with the non-government sector in mind. The new regulations will be applicable to both the Common Scheme and the Multiple Scheme Framework (MSF) under the All Citizen Models of NPS. By simplifying the NPS exit rules, it is anticipated that more people will show interest in this retirement plan.

Removal of the five-year lock-in period

The most notable change pertains to the lock-in duration for a normal exit in the NPS-All Citizen Model. PFRDA has eliminated the five-year minimum lock-in requirement. Previously, subscribers had to stay invested for a minimum of five years to exit the scheme. Now, they can withdraw their funds even before reaching the five-year mark. Experts believe this will enable subscribers to access their NPS funds when necessary.

Updates to vesting period regulations as well

The rules regarding the vesting period have also been made simpler. Subscribers can now exit the scheme after 15 years or upon reaching the age of 60, whichever occurs first. In the past, subscribers had to wait until they turned 60 to withdraw funds. However, the vesting period for corporate sector subscribers remains the same; they can only withdraw funds upon reaching retirement age, as was the case before.

Increased one-time withdrawal limit

Additionally, PFRDA has raised the lump-sum withdrawal limit for normal exits. Subscribers can now take out up to 80% of their corpus in one go. Previously, the limit for a lump-sum withdrawal was capped at 60% of the corpus. The minimum requirement for purchasing an annuity has also been lowered from 40% to 20%. This change will ensure that subscribers have more funds available when they retire.

Withdrawal of up to 80% of the corpus is permitted

SBI Pension Funds MD and CEO Pranay Ranjan Dwivedi said, “Subscribers will now be able to withdraw up to 80% of the corpus. Of this, 60% will be completely tax-free. The remaining 20% will have to be used to purchase an annuity.” Upon the subscriber’s death, the entire corpus will be allowed to be withdrawn in a lump sum by the nominee. However, the option to purchase an annuity will remain available.