National Pension System (NPS) is a long term pension scheme, which provides lump sum and pension benefits on retirement. New rules regarding partial withdrawal in this Contributory Pension Scheme run by the Central Government are going to be implemented from February 1. Actually, the Pension Fund Regulatory and Development Authority (PFRDA) had issued a circular regarding NPS partial withdrawal on January 12, 2024.
This circular states that NPS account holders can withdraw up to 25% of the amount excluding employer contribution from the individual pension account. This facility will be available to account holders from 1st February. In such a situation, know here under which conditions partial withdrawal can be made from NPS, what are the necessary conditions and process.
Know in which situations you can withdraw money
- If you need money for your children’s higher education, you can make partial withdrawal from NPS.
- Account holders can also make partial withdrawal up to 25 percent for the marriage of children.
- Partial withdrawal can also be made for buying a house, home loan repayment etc., but this rule has been slightly changed. If you already have a house in your name or your spouse’s name, you will not be able to avail this facility to buy another house.
- Money can be withdrawn from the NPS account for hospital stay and treatment expenses during serious illnesses.
- The amount can be withdrawn in case of medically incapacitation or disability due to any accident.
- In case of serious illness, the amount can be withdrawn for hospitalization or treatment.
- You can withdraw money for starting any kind of business, startup, skill development or any course.
Requirements for partial withdrawal
- NPS subscribers must be a member for at least three years from the joining date.
- More than one-fourth of the subscriber’s contribution cannot be withdrawn from the pension account.
- Withdrawals can be made a maximum of 3 times during the entire subscription tenure. It is necessary to have a gap of 5-5 years during all the three partial withdrawals. This withdrawal will not exceed 25 percent of your entire contribution.
What is the withdrawal process?
- To withdraw the amount of 25 percent or less under NPS, one will have to first apply to any government nodal agency of NPS.
- Along with this application, you will have to give a self-declaration as to the purpose for which you are withdrawing the amount.
- After this the application will have to be submitted to the Central Recordkeeping Agency (CRA).
- Then the agency will process the application after verification.
- If the subscriber is ill, a family member or nominee can make this request in his place.
Let us tell you that the Central Government had launched the National Pension Scheme on January 1, 2004. Initially, it was only for government employees, but after 2009, private sector employees were also given the facility to invest in this scheme. According to PFRDA, after the age of 60 years (retirement), there is a facility to withdraw 60 percent of the total maturity amount from NPS in lump sum, the remaining 40 percent of the maturity amount has to be invested in an annuity plan, from which pension is received.
