New Delhi, Dec 16 (IANS) Non-government NPS subscribers can now withdraw 80 per cent of their retirement corpus as a lump sum at the time of exit, according to the Pension Fund Regulatory and Development Authority’s (PFRDA) amended regulations announced on Tuesday.
PFRDA’s amendments to the National Pension System (NPS) make the exit rules under the non-government sector much more flexible under the Common Schemes (CS) and Multiple Scheme Framework (MSF).
Earlier, subscribers could withdraw only up to 60 per cent of their corpus as a lump sum at exit, with at least 40 per cent mandatorily used to buy an annuity.
Under the revised framework for corpus exceeding Rs 12 lakh, the new rule is shifted to 80:20, allowing non-government subscribers to take up to 80 per cent as a lump sum while requiring only 20 per cent of the pension wealth to be used for purchasing an annuity, which provides periodic pension income.
For those with a corpus above Rs 8 lakh up to Rs 12 lakh, withdrawals of up to Rs 6 lakh are allowed upfront, while the remaining balance must be deployed towards an annuity with a minimum tenure of six years.
The new regulations also introduce relaxed withdrawal norms for subscribers with smaller pension balances.
If the accumulated pension wealth is up to Rs 8 lakh, subscribers are allowed to withdraw 100 per cent as a lump sum.
They will also get the option to utilise at least 20 per cent of the pension wealth for annuity purchase and withdraw 80 per cent as a lump sum.
The revised rules allow subscribers to remain invested until the age of 85, unless they choose to exercise an exit option.
Normal exit has now been permitted after completing 15 years of subscription or upon attaining 60 years of age, superannuation, or retirement, whichever comes first.
The new amendment has also removed the mandatory lock-in period of five years for the non-government subscribers of NPS.
For government employees under NPS, the five-year lock-in period is mandatory for any exits to be permitted. The normal exit is permitted after 60 years of age, wherein 100 per cent withdrawal is permitted if the corpus is less than Rs 5 lakh.
In the case of accumulated wealth exceeding Rs 5 lakh, 40 per cent will be subject to annuity, and the remaining balance can be withdrawn upfront.
--IANS
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