The National Pension System (NPS) offers subscribers the ability to deposit anytime and grow the corpus for their long-term financial security, typically post-retirement. It also offers a partial withdrawal facility.
Complete Withdrawal At Maturity Or After: A subscriber can withdraw the entire corpus at superannuation or after turning 60. Note that full withdrawal means 60 per cent withdrawal as a lump sum and 40 per cent as an annuity. Additionally, NPS also offers the option to postpone withdrawal until the age of 75.
Full Withdrawal Before Maturity: In certain cases, subscribers can make premature withdrawal of full amount, such as in case of permanent disability sever illness, or death. In this case, annuity is not necessary and full amount can be withdrawn.
Premature Exit: NPS allows premature exit if a subscriber chooses not to continue for some reason and wants to withdraw money. However, the withdrawal is limited to 20 per cent in lump-sum and 80 per cent through an annuity. In case of corpus being less than Rs 2.5 lakh, 100 per cent amount can be withdrawn. To qualify for a premature withdrawal, a subscriber should have been invested in the scheme for at least 10 years.
Partial Withdrawal: Withdrawals can only be made after three years of enrollment in the scheme for a maximum of 25 per cent of the subscriber's contribution. It is permitted for a maximum of three times during the entire subscription period. Notably, partial withdrawal is allowed only for specific reasons.
Rajesh Khandagale, SVP – NPS, KFin Technologies explains, "As per regulation, purchase or construction of a residential house or flat in the subscriber's own name or in joint name with their legally wedded spouse. However, if the subscriber already owns a residential house or flat (other than ancestral property), no withdrawal shall be permitted."
Now, the questions arise, What is the procedure for withdrawing funds from NPS, and what are the different withdrawal forms available?
NPS Withdrawal Forms:
There are different NPS withdrawal forms for all different withdrawal requests mentioned above. However, unlike the traditional system of allotting numbers to different forms, the NPS system is simple. Every form bears the withdrawal reason on the top of the first page of the form.
The Pension Fund Regulatory And Development Authority (PFRDA) permits withdrawal request submission both online and offline. To get the form online, a subscriber needs to log in and look for the form with relevant withdrawal reasons. For offline requests, a subscriber is required to tell the concerned person at the point of presence (PoP) to hand over the relevant form.
How To Withdraw NPS Online:
There are three Central Recordkeeping Agencies (CRAs) in NPS, that take care of maintaining all records of the subscribers. These are Protean eGov Technologies, KFin Technologies, and Computer Age Management Services Ltd (CAMS).
One needs to log in to the official portal of the concerned CRA and log in with the permanent retirement account number (PRAN) and password.
Look for the 'Transact Online' tab and click on the 'Withdrawal' option.
Select the type of withdrawal from partial, premature, or superannuation.
Download the NPS withdrawal form, fill in the details, attach the required documents, and submit.
The process takes around 10 days to complete. The money is directly transferred to the subscriber's bank account.
How To Withdraw NPS Offline:
Many subscribers withdrawing their funds at superannuation or after turning 60 or more, may find more comfortable with submitting requests offline.
Such subscribers can either download the relevant NPS withdrawal form from online portal of any of the CRA. They can also get it from the nearby POP service provider or nodal office.
The process remains the same, fill up the details, attach the documents and submit the form in person to the POP-SP for processing the request. The funds are transferred to bank account.
Note that it may take around 10 days to process a withdrawal request from NPS Tier-I and around 3 days for Tier-II.
