NOW SUBSCRIBERS CAN WITHDRAW WHOLE AMOUNT FROM NPS : BIG CHANGES BY PFRDA

Pension Fund Regulatory & Development Authority (PFRDA) has granted withdrawal of upto 5 Lakh or less INR without buying any equity/pension plan for NPS (National Pension Scheme) subscribers. Before this rule, NPS holders could only withdraw 60% of lump sum amount, rest for 40% they needed to opt for equity/pension plan from companies.

NPS (National Pension Scheme)

According to the latest rule, any NPS account holder having 5 lakh or less money can withdraw whole amount in lump sum without any restrictions. The PFRDA has also increased the withdraw limit of 1 lakh (prior) to 2.5 lakh now on pre-clearance. 

NOW SUBSCRIBERS CAN WITHDRAW WHOLE AMOUNT FROM NPS

The authority has extended the entry age for NPS plan from 65 to 70 now, and exit age is 75. This is on personal choice whether a person wants to continue his NPS or not. NPS is mandatory for all government employees after year 2004. Any person can have NPS whether he is working or non-working individual.

The PFRDA has taken this step because of Covid-19 crisis. People seemed to face critical financial conditions because of the coronavirus outbreak. This made the PFRDA to think for change in withdrawal rules from NPS. This change is good for those who were facing the financial crisis. Now the individuals need not to get restricted to take equity before withdrawing the amount for mentioned parameter.

By the way, there is already partial withdrawal provision for essential requirements. Only three times withdrawal is accepted for whole life before maturity. Remember, the partial withdrawal is tax exempted.

Equity - Equity is a term given in NPS dictionary generally means a plan that you give lump sum amount to company for getting pension after retirement. This is compulsory for NPS subscribers. 60% lump sum amount withdraw is allowed after retirement, while 40% should be used to buy equity for pension as per existing rules of NPS.

About NPS - NPS (National Pension Scheme) was launched in 2004 by the Indian government for the purpose of investment & retiring plan. NPS performs on the basis of market conditions. Government uses the subscribers money in stock market and repay with interest. Tract record says there is around 10% or more returns in NPS. This makes NPS attractive for investment and retiring purpose.

Types of NPS - There are two types of NPS. Tier-I and Tier-II.

Tier-I is compulsory before opting for Tier-II account. Subscribers can choose NPS allocation for Tier-I for different items/companies. While the Tier-II is only for investment purpose. Beginners who do not have much idea about stock market can invest small amount in Tier-II of NPS and can track the amount with current fluctuating market conditions.

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