National Pension System: No restriction on premature withdrawals from these accounts - What NPS subscribers must know
The central government subscribers will be allowed to choose any one of the pension funds including Private sector pension funds. They could change their option once a year. However, the current provision of a combination of the Public-Sector Pension Funds will be available as the default option for both existing as well as new government subscribers.
The subscribers of National Pension System (NPS) have good news as the government has allowed them to go for a premature withdrawal from the new Pension Scheme Fund. A subscriber is now eligible for three partial withdrawals during the period of subscription under NPS, each withdrawal not exceeding 25 per cent of the contributions made by him/her and excluding contributions made by the employer, according to a government statement. However, there is no restriction on withdrawals from the Tier-II account of the subscriber.
Notably, NPS comes with Tier I and Tier II acounts. Tier I is the retirement account which gets a host of tax breaks, while Tier II is a voluntary account allowing NPS subscribers to invest and take out money anytime.
In a written reply to a question in Rajya Sabha today, Minister of State for Finance Shiv Pratap Shukla gave this information.
In case of sudden financial needs of the subscribers, the requirement of minimum period under NPS to avail the facility of partial withdrawal from the mandatory Tier-I account of the subscriber has been reduced from 10 years to 3 years from the date of joining i.e, 10th August, 2017, said the statement, adding that the minimum gap of 5 years between two partial withdrawals has also been removed from 10th August, 2017.
On December 6, 2018, the government approved the following proposals pertaining to choice of Pension Fund and investment pattern for central government subscribers under NPS:
The central government subscribers will be allowed to choose any one of the pension funds including Private sector pension funds. They could change their option once a year. However, the current provision of a combination of the Public-Sector Pension Funds will be available as the default option for both existing as well as new government subscribers.
According to the statement, the following options for investment choices will be offered to central government employees:
1. Government employees who prefer a fixed return with a minimum amount of risk may be given an option to invest 100% of the funds in Government securities (Scheme G).
2. Government employees who prefer higher returns may be given the options of the following two Life Cycle based schemes.
3. Conservative Life Cycle Fund with maximum exposure to equity capped at 25% at the age of 35 years and tapering off thereafter (LC-25).
4. Moderate Life Cycle Fund with maximum exposure to equity capped at 50% at the age of 35 years and tapering off thereafter (LC-50).
5. In case an employee does not submit any choice, the existing allocation of funds shall continue as the default option.
Get Latest Business News, Stock Market Updates and Videos; Check your tax outgo through Income Tax Calculator and save money through our Personal Finance coverage. Check Business Breaking News Live on Zee Business Twitter and Facebook. Subscribe on YouTube.
RECOMMENDED STORIES
SBI 444-day FD vs Union Bank of India 333-day FD: Know maturity amount on Rs 4 lakh and Rs 8 lakh investments for general and senior citizens
Power of Compounding: Salary Rs 25,000 per month; is it possible to create over Rs 2.60 crore corpus; understand it through calculations
New Year Pick by Anil Singhvi: This smallcap stock can offer up to 75% return in long term - Check targets
Power of Compounding: How many years it will take to reach Rs 2 crore corpus if your monthly SIP is Rs 3,000, Rs 4,000, or Rs 5,000
Retirement Calculator: 40 years of age, Rs 50,000 monthly expenses; what should be retirement corpus and monthly investment
07:37 PM IST