The
Pension Fund Regulatory and Development Authority (PFRDA) outlined the rules for partial withdrawal from the
National Pension System (NPS)in a master circular last week. The new rules will come into force from February 1.
PFRDA’s January 12 notification also detailed the purposes for which partial withdrawals from the NPS fund will be allowed. Here are those:
- Higher education and marriage of children, including a legally adopted child.
- Purchase or construct a residential house owned by the NPS member or jointly with the subscriber’s legally wedded spouse. However, it must be the subscriber’s first house other than an ancestral property. Those who already own a house are not eligible.
- Treatment of cancer, kidney, pulmonary arterial hypertension, sclerosis, coronary artery bypass graft, stroke, major organ transplant, aorta graft surgery, heart valve surgery, myocardial infarction, total blindness, paralysis, coma, life-threatening accidents, etc.
- Medical and other expenses due to the subscriber’s incapacitation or disability.
- Expenses incurred for re-skilling, up-skilling, or any other self-development activity.
- Expenses incurred by the subscriber to establish a venture or start-up.
Also Read: Budget Expectations FY2024-25: What NPS Investors Should Watch Out For Criteria For Partial Withdrawal?
The subscriber should be an NPS member for at least three years at the time of partial withdrawal, and the amount cannot be more than 25 per cent of the subscriber’s total contributions. Employer’s contribution is excluded from the withdrawal calculation. Also, only the amount contributed is allowed for partial withdrawal and not the returns generated.
Up to three partial withdrawals are allowed during the subscription period. After the first withdrawal, the subsequent withdrawals will be allowed only on the incremental contributions from the date of the previous withdrawal.
Also Read: How Does The NPS Prosperity Planner Work, And What You Can Do With It? Processing Of Partial Withdrawal Request:
For partial withdrawals, subscribers must submit a withdrawal request and a self-declaration to the Point of Presence (PoP) or the government nodal office, mentioning the purpose of the withdrawal, which will be further processed by the central recordkeeping agency (CRA).
Also Read: What Is Penny Drop Verification In NPS, And How Does It Work? If the person suffers from any of the listed illnesses, a family member can submit the request on the subscriber’s behalf. The PoP will identify the beneficiary and CRA will verify the subscriber’s details, including bank account through the ‘Instant Bank Account Verification’ process using the penny drop method or other technology and process the withdrawal request.
