Kolkata: The NPS (National Pension System) voluntary and flexible retirement savings scheme that is open to all Indians. It helps people to save for their future and is not dependent on whether a contributor to the scheme is employed or not. NPS is a market-linked scheme. It is overseen and regulated by the Pension Fund Regulatory and Development Authority (PFRDA). However, Employers can also contribute to their employees’ NPS accounts.
One of the remarkable features of NPS is NPS Vatsalya, which enables a parent/legal guardian of a child to open an account soon after his/her birth. This feature enables the account to remain operative for more than 60 years, packing in humongous compounding power where small monthly contributions can create a corpus of several crores. Though essentially built for long-term investment, there are provisions for early withdrawal in emergency situations.
Can NPS be withdrawn prematurely
A contributor can make partial withdrawals only if he/she has been an NPS subscriber for at least 3 years from the date of joining it. The NPS portal states a few rules categorically: One can withdraw up to a maximum of 3 times during the entire tenure of one’s NPS account. Therefore, early withdrawals cannot be made as many times as one wants. Two, one can withdraw up to 25% of the contribution in NPS at any point of time. However, this amount excludes the amounts contributed by one’s employer (if any). Three, if one is making more than one particle withdrawal, one can take out only 25% of the contributions made by one between the current application and the last withdrawal.
Can we withdraw 100% from NPS
It is clear from the above that one cannot withdraw the full amount from the NPS contributions. However, one should also know the conditions under which one can apply for partial withdrawal from NPS. These are:
- Higher education or wedding of your children
- Purchase/construction of house or flat (has to be in your name)
- Certain ailments needing hospitalisation/treatment for self/spouse/parents/kids
- Medical expenses for disability/incapacitation
- Expenditure for skill upgradation
- Starting a business venture
Partial withdrawal is permitted for treatment of the following ailments: Cancer, Primary pulmonary arterial hypertension, Kidney failure, Multiple sclerosis, Major organ transplant, Coronary artery bypass, Aorta graft surgery, Heart valve surgery, Stroke, Myocardial infarction, Coma, Total blindness, Paralysis, Serious accident.
Though NPS (National Pension System) is designed for long-term compounding of investments, it has in-built flexibility to allow a contributor to withdraw funds early. n investor might suddenly feel emergency needs for funds on an urgent basis without notice when the retirement funds can be of help. Personal Finance Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
