NPS Withdrawal: What are the new rules? What is the withdrawal limit?

NPS Withdrawal Limit: The National Pension Scheme is a government-run pension scheme. Recently, the Pension Fund Regulatory and Development Authority (PFRDA) has made changes to NPS withdrawals for subscribers. The changes include making instant bank account verification mandatory to ensure timely credit of National Pension System (NPS) funds to the bank accounts of subscribers at the time of withdrawal or exit from the scheme, and proposed subscribers can withdraw up to 60 per cent of their pension corpus through the systematic lump sum withdrawal facility (SLW) on a monthly, quarterly, or half-yearly basis. 

NPS Withdrawal Rules

Upon Superannuation: When a subscriber reaches the age of 60 years, they will have to use at least 40 per cent of their accumulated pension corpus to purchase an annuity that would provide a regular monthly pension. 

The remaining funds can be withdrawn as a lump sum. If the total accumulated pension corpus is less than or equal to Rs 5 lakh, the subscriber can opt for a 100 per cent lump sum withdrawal.

Pre-mature Exit - In a pre-mature exit from NPS, at least 80 per cent of the accumulated pension corpus of the subscriber has to be utilised for the purchase of an Annuity, which would provide a regular monthly pension.

The remaining funds can be withdrawn as a lump sum. However, you can exit NPS only after completing 5 years. If the total corpus is less than or equal to Rs. 2.5 lakh, subscribers can opt for a 100 per cent lump-sum withdrawal.

Upon Death of the Subscriber - The entire accumulated pension corpus (100 per cent) would be paid to the nominee of the subscriber.

NPS Partial Withdrawal Rules

Subscribers can withdraw only three times during the tenure of their subscription. A subscriber can withdraw only up to 25 per cent of their contributions. Subscribers should have been a member of this scheme for at least three years in order to be eligible for partial withdrawal. NPS Partial Withdrawal is only allowed for the education of children, marriage, house construction, or medical emergencies.

NPS Withdrawal Limit

The NPS withdrawal limit for Tier I and II accounts is as follows:

Tier I

There are multiple withdrawal rules regarding NPS Tier I account holders. The key withdrawal rules for Tier I accounts involve specific scenarios which are partial withdrawal, and withdrawal before and after maturity.

Tier II

There is no withdrawal limit for Tier II accounts. Tier II accounts are preferred for investing but they don't provide any tax benefits under Section 80C.