NPS Rules: The pension regulator, Pension Fund Regulatory and Development Authority (PFRDA), recently made several significant changes to the rules governing the National Pension Scheme (NPS). This has provided investors with several new options. This will provide them with more cash in hand and enable them to better plan their pension plans. Furthermore, they can now remain in the scheme for longer periods.
Now you can stay in NPS till the age of 85
Previously, the maximum age for remaining in the NPS was 75 years, but the government has now raised it to 85. This means that members can now invest in the NPS until they reach the age of 85. For private employees, the requirement to invest 40% of their total pension fund in a pension plan, i.e., annuity, has been removed. Members can now invest a minimum of 20% of their total pension fund in annuity upon retirement. This annuity is the basis for future pension payments. However, there has been no change for government employees.
Full withdrawal facility subject to conditions
If a member’s NPS account has a total balance of Rs 8 lakh or less, they can withdraw the entire amount at once. If they don’t, they will have the following options: First, government employees will have the option to invest 40% of their funds in annuity. However, private employees will be required to invest at least 20% of their funds in annuity if they don’t withdraw the entire amount.
NPS now offers the option of installment withdrawals. This facility is available to investors with a total corpus of between Rs 8 lakh and Rs 12 lakh. Such investors can withdraw Rs 6 lakh in one lump sum and the remaining amount in installments through Systematic Unit Redemption (SUR). The condition is that this option must be held for at least six years.
Now, NPS members will be able to make a maximum of four partial withdrawals before the age of 60 or retirement. Previously, this limit was three. However, it is important to note that there must be a minimum gap of four years between two withdrawals. Those who wish to remain in the plan after age 60 will still be able to withdraw funds periodically. A three-year gap is required between withdrawals, and you can withdraw a maximum of 25% of your contributions.
Withdrawal of the entire amount upon renouncing citizenship
If an NPS member gives up Indian citizenship, he can withdraw his entire corpus in one lump sum. If a member goes missing or is presumed dead, 20% of the total fund will be disbursed immediately to the nominee or legal heir. The remaining 80% will be disbursed after the member is declared legally dead. Now, the NPS fund can be pledged to obtain a loan from a bank. The loan amount will depend on the percentage of the total deposited funds. With the loan facility, the NPS has now become a liquid asset.