The NPS withdrawal rules are applicable on premature as well as mature exit by the NPS subscriber. This, however, depends on various terms and conditions.
National Pension Scheme is a willful retirement saving scheme that intends to empower the subscribers to make ideal decisions regarding their future through systematic savings during their working life. NPS tries to develop the habit of saving for retirement among citizens. It is an attempt to find a sustainable solution to the problem of giving adequate retirement pay to each resident of India.
When can a Subscriber withdraw funds from NPS?
The subscriber can withdraw funds from NPS in the following four cases:
Firstly, partial withdrawal
Secondly, pre-mature Exit
Thirdly, upon superannuation
Fourthly, upon the death of the subscriber
Partial NPS Withdrawal Rules
If the subscriber is in emergent need of cash and he has no other option available, then he can make a partial withdrawal of the amount from the NPS fund. The cases where the subscriber can make partial withdrawal of NPS funds are:
– Marriage of children
– Higher education expenses of children
– For purchasing a new house. However, the subscriber should not already own a house.
– In case of severe medical conditions like an organ transplant, kidney failure, cancer, etc
– Treatment of life-threatening or serious accidents and other illnesses.
Also Read: Taxability of Pension: All You Need to Know
Furthermore, the subscriber can make a partial withdrawal of NPS funds only if he/she abides by the following rules:
– Be an NPS subscriber for at least three years
– To not to withdraw more than 25% of the total fund.
Premature NPS Withdrawal Rules
Pre-mature exit is when the subscriber chooses to withdraw funds from NPS before attaining the age of superannuation / attaining 60 years of age. In such a case, he will have to invest 80% of the total pension corpus for the purchase of an annuity that would provide a regular monthly pension. Consequently, he/she can withdraw the remaining funds as lump sum. Further, the subscriber can make a premature withdrawal from NPS only after the completion of 5 years.
If the total corpus is less than or equal to Rs. 2.5 lakh, Subscriber can opt for 100% lumpsum withdrawal.
NPS Withdrawal rules on attaining superannuation
When a subscriber reaches the age of superannuation/attains the age of 60 years, he or she can withdraw funds from NPS. However, he/she will have to use at least 40% of the accumulated pension corpus to purchase an annuity that would provide a regular monthly pension. Thereafter, he/she can withdraw the remaining amount. Further, if the subscriber chooses not to withdraw the lump sum amount, then he/she can put it off till he/she attains the age of 70 years.
If the total pension corpus is less than or equal to Rs. 5 lakh, the subscriber can opt for 100% lumpsum withdrawal.
Also Read: Know Incomes Free From Taxes In India
NPS Withdrawal rules on death of subscriber
In case of death of subscriber, the legal heir/nominee has a right to withdraw the entire corpus (100%) of the NPS amount.
How to withdraw funds from NPS account?
The subscriber can withdraw from NPS account either online or offline. The steps for the same are as follows:
For Online withdrawal
- Visit the NSDL – CRA website and provide ID or PRAN with the associated password to log in.
- Select ‘Transact Online’ and select ‘Withdrawal’ from the drop-down menu
- Then choose ‘Partial Withdrawal from Tier I’ from the available options.
- After entering the correct PRAN, click submit.
- Then you have to fill out a reason for your withdrawal, and the percentage you wish to withdraw.
- Finally, click ‘Submit’.
For Offline Withdrawal
The subscriber needs to fill corresponding exit, partial, or retirement form and attach the required documents. Then submit the form along with the documents to the nearest POP.
Documents necessary for NPS funds withdrawal
The documents necessary for NPS funds withdrawal are as follows:
– Advance stamped receipt signed and filled, along with the revenue stamp of the concerned NPS subscriber
– Bank passbook,
– Cancelled cheque,
– Bank’s letterhead,
– Bank’s certificate with proof of account holder name, account number and IFSC code
– Undertaking cum request form for full withdrawal of the amount
– Aadhaar Card
– PAN Card