The National Pension System (NPS) will have several major changes starting October 1. These changes will directly affect the beneficiaries’ money. The goal of these changes is to make the scheme easier to use. They cover everything from withdrawals to investments. Let’s look at these changes one by one.
NPS New Rules: What Will Change?
A new change in NPS will directly benefit investors. This is good news for those who invest in the stock market under NPS. Now, investors can put 100% of their NPS funds in the stock market. However, this also increases the risk of returns.
It is up to the investor whether they want to invest all their funds in stocks. NPS does not require investing money in the stock market.
Investors will also get a PRAN number under the MSF (Multiple Scheme Framework), which lets them manage different schemes easily.
Changes in Withdrawal and Exit Rules
The NPS exit and withdrawal rules have also changed. Earlier, beneficiaries got their funds only at retirement. Now, like EPF, NPS investors can withdraw funds early in certain cases, such as education, marriage, and medical emergencies.
At retirement, earlier you could withdraw 60% in a lump sum and get 40% as annuity. Now, you can withdraw 80% in a lump sum and get 20% as annuity.
Tax rules remain the same. If you withdraw 80% in a lump sum, 60% is tax-free, and 20% is taxed as per your income slab.
Who Can Invest in NPS?
Everyone can invest in NPS, including government and private employees. Earlier, exits were allowed only after retirement. Now, investors can exit after 15 years.