National Pension System (NPS): Guidelines for Withdrawals

In a aim to save more, withdrawal guidelines under NPS has a long period of accumulation of corpus for providing him with a decent accumulated pension wealth when he retires or he moves out of the regular work routine due to age.

Also, it lets the subscriber has the freedom to move out of the scheme at any point of time, irrespective of cause or reason.

The following are the current rules/guidelines for withdrawals under NPS as approved by PFRDA:

(a) Exit from NPS upon attaining the age of normal superannuation (for govt. employees only) or upon attaining the age of 60 years. At least 40% of the accumulated pension wealth of the subscriber needs to be mandatorily utilized for purchase of an annuity providing for the monthly pension of the subscriber and the balance is paid as a lump sum payment to the subscriber.

(b)  Exit from NPS before attaining the age of normal superannuation (for govt. employees only) or before attaining the age of 60 years (for all subscribers other than govt. employees): At least 80% of the accumulated pension wealth of the subscriber needs to be utilized for purchase of an annuity providing for the monthly pension of the subscriber and the balance is paid as a lump sum payment to the subscriber.

(c) Upon Death: The entire accumulated pension wealth (100%) would be paid to the nominee / legal heir of the subscriber.

For withdrawals arising out of NPS-Swavalamban accounts under (a) & (b) above, there is an overriding condition on the lump sum payment payable due to which the entire accumulated pension wealth would be annuitised in case if the monthly pension obtained by using the 40%/80% of the pension wealth is below Rs.1000/- per month.

In case of withdrawals related to claims for other than death of the subscriber, the subscriber has to fill in a separate Annuity application/proposal form after choosing an annuity Service Provider (ASP) and the type of annuity that he would like to take.

 For this the subscriber, may check the premium quotes from the ASPs for the given purchase price and decide on the choice of ASP as well as the annuity type.