New Delhi: The National Pension System (NPS) offers post-retirement benefits to salaried individuals. While experts discourage early withdrawal from the scheme, there are provisions for withdrawing funds before maturity. To be sure, the NPS corpus matures when the subscriber attains the age of 60 years. However, an NPS subscriber can withdraw 25 per cent of their contribution after completing 3 years of subscription under certain conditions.
Conditions for premature NPS withdrawal
NPS subscribers may partially withdraw from their corpus under the following circumstances:
Illness
Disability
Education
Children’s marriage
Purchasing property
Starting a new venture
However, one must remember that one can make just 3 partial withdrawals during the entire association with NPS.
“After completion of 5 years or before completion of 3 years (if subscriber joined NPS after attaining 60 years of age), subscriber can withdraw maximum 20 per cent of the corpus as lumpsum and minimum 80 per cent of the corpus has to be utilised for purchasing an annuity plan for receiving the pension,” according to NPS. However, if the accumulated corpus is less than Rs 2.5 lakh, the full amount is paid as lumpsum to the subscriber.
NPS Normal withdrawal rules
Now consider a normal withdrawal that someone makes at the age of 60. It is also applicable after a contributor completes 3 years if he/she joins NPS after 60 years of age. In this situation, a subscriber can withdraw 60 per cent of the corpus as lumpsum. A minimum 40 per cent of the corpus has to be used for purchasing an annuity plan from which the subscriber will receive a monthly pension.
However, if the fund accumulated is less than Rs 5 lakh, the entire amount is paid lumpsum to the subscriber. To be sure, the subscriber has the freedom to continue contributions until the age of 75 years or exit anytime. In case of the demise of the subscriber, the nominee or legal heir can withdraw the entire corpus from NPS. They are also entitled to buy an annuity if they so desire. NPS withdrawal requests can be submitted online and offline.
NPS withdrawal rules: The NPS has been designed for the long-term building of a corpus for post-retirement life. However, there are situations when one can withdraw funds earlier. Personal Finance Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
