The Pension Fund Regulatory and Development Authority PFRDA) has introduced new provisions of withdrawal of pension under the National Pension System (NPS). These provisions will come into effect from Feb 1, 2024.
As per the updated rules, NPS subscribers cannot withdraw more than 25 per cent of their contributions to their individual pension account excluding the employer’s contribution.
Subscribers can make partial withdrawals only three times throughout the duration of their subscription. To qualify for a partial withdrawal, subscribers must have been a member of this scheme for a minimum of three years. NPS partial Withdrawal is permitted for purposes such as education expenses for children, marriage, house construction, or medical emergencies.
As per the new rules, subscribers can go for partial withdrawals, if:
> Higher education expenses for the subscriber’s children. This is also applicable for legally adopted children.
> Marriage expenses for the subscriber’s children. Also applicable for legally adopted children.
> Purchase or construction of a residential house or flat in the subscriber’s name or jointly owned.
> Medical expenses for specified illnesses, such as cancer, kidney failure, primary pulmonary arterial hypertension, multiple sclerosis, major organ transplant, coronary artery bypass graft, and others.
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> Medical and incidental expenses arising from the disability or incapacitation suffered by the subscriber.
> Expenses for skill development or re-skilling.
> Expenses incurred by the subscriber for establishing their venture or any start-up.
Other clauses for partial withdrawals:
> Subscribers should be a member of the NPS for a minimum of three years from the date of joining.
> The partial withdrawal amount should not exceed one-fourth of the subscriber’s total contributions (25%) in their pension account.
> For subsequent partial withdrawals, only incremental contributions made by the subscriber from the date of the previous partial withdrawal shall be allowed.
How to apply for the withdrawal?
Subscribers are required to submit their withdrawal request to the Central Recordkeeping Agency (CRA) through their respective government nodal office or point of presence. The request should include a self-declaration explaining the purpose for the withdrawal.
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If the subscriber is ill, his or her’s family member can submit a request for withdrawal. Once a withdrawal request is received, the Point of Presence or Government Nodal Office will identify the recipient.
