Two Factor Authentication is going to be implemented in NPS from April 1. In this, NPS subscribers will have to login through Aadhaar verification and OTP received on mobile. With this, the NPS account will be kept more secure than before. Currently, user ID and password are required to login to the account. Any kind of change is possible only after logging in through them.

PFRDA has changed the withdrawal rules from February 1. Under the new rules, the NPS account holder is not allowed to withdraw more than 25 percent of the total deposited amount. This will include the contribution amount of both the account holder and the employer. According to this, if you already have a house in your name then partial withdrawal from the NPS account will not be allowed for it.

PFRDA has also changed the rules for withdrawing money. Under the new rule, NPS subscribers can withdraw money from their investments as per their need instead of lump sum amount. Under this rule, you will be able to withdraw the maturity amount on monthly/quarterly/half yearly or yearly basis as per your need. Earlier the rule was that you could withdraw 60 percent of the amount deposited in NPS at one go. But it was necessary to buy an annuity plan for pension with the remaining 40 percent amount.

Earlier, PFRDA had changed the rules for withdrawing money. According to the new rules, you will need some documents to withdraw money. If the person taking the benefit does not upload the prescribed documents or any discrepancy is found in it, then his pension may be stopped. First of all you have to check whether you have uploaded the NPS withdrawal form or not. Apart from this, you should also have a copy of bank account proof, PRAN or Permanent Retirement Account Number card.

Earlier, PFRDA had last year done away with the need to complete a separate proposal form for selecting annuity after leaving the pension fund, in an effort to simplify the withdrawal process for NPS subscribers. It was indicated by the Pension Board that the withdrawal form filed by the NPS subscribers will be considered as annuity proposal.

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The Pension Fund Regulatory and Development Authority (PFRDA) has made full preparations to bring these changes to the ground.

PFRDA had made it clear in the circular issued on October 27, 2023 that by making changes in Rule 3 and Rule 4, it is going to start Systematic Lump Sum Withdrawal (SLW) for withdrawal of money after the stipulated time. Under this, NPS account holders will be able to withdraw up to 60 percent of the amount deposited in the pension fund. In SLW, you will have the freedom to withdraw money on monthly, quarterly, half-yearly or yearly basis till the age of 75 years as per your convenience.

What is SLW?

If we want to understand it in simple words, then it is similar to the Systematic Withdrawal Plan (SWP) available under mutual funds. People coming under the purview of NPS will be able to withdraw money within the time interval of their choice. Under this, whatever option you choose from your 40 percent fund after reaching the age of 60, the retired employee will continue to be paid continuously till the age of 75 years.

You will be able to withdraw the remaining 60 percent of the fund together or systematically under SLW. With the help of SLW, pensioners will continue to receive money. This will ensure that they have a fixed income after retirement and will not be burdened with expenses. In this process, you will get the opportunity to choose the option once.

Who will benefit from SLW?

Those who want a fixed income even after retirement will benefit greatly from this scheme. This benefit can be availed at the time of retirement.

How does NPS work?

NPS is a program run by the Government of India, which operates under the supervision of PFRDA. NPS invests money in many places including equities, government securities and corporate bonds. In this way NPS keeps strengthening its retirement fund.

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Pension fund regulator PFRDA has made important changes in the rules of National Pension Scheme (NPS) for government employees. Now the option of default scheme will be available in the NPS Tier-2 accounts of employees. With this, employees will be able to choose the Pension Fund Manager (PFM) and the range of returns in percentage for their investments. This will reduce investment risk in Tier-2 account and provide more profit opportunities.

The Pension Fund Regulator has recently issued a circular in this regard. According to this, the pension fund manager will invest their funds as per the options chosen by the account holders. The management of the default scheme fund has been entrusted to three pension fund managers. Other investment options like equity, corporate debt and government debt will also be available in Tier-2 account as before.

This will be the benefit: According to market experts, till now the option of default plan was available in NPS Tier-1 account. In this, the employee’s funds are managed by PFRDA on behalf of PFM. This facility was not available in Tier-2. The employee had to manage it himself, which created investment risk.

In the new system, investors who do not have much understanding of financial investments will be able to invest in Tier-2 accounts with the help of the default plan. As their understanding increases over time, they can make changes to their portfolio as per their financial goals and risk appetite.

What is NPS: NPS was started in January 2004 for government employees. In the year 2009, it was also opened to the private sector and common citizens. The responsibility of investing the amount deposited in the scheme is given to the registered pension fund managers by PFRDA. They invest the money in equities, government bonds, bonds and non-government and fixed income schemes.

Difference between Tier-1 and Tier-2 accounts

Two types of accounts can be opened under the NPS scheme. Tier-1 account is for pension, while Tier-2 account is like a voluntary savings account. Tier-2 account can be opened only if there is already a Tier-1 account. In the former account, the contribution of a government employee is on the lines of EPF. But in other accounts there is no limit. Tax exemption is available on Tier-1 account, but this exemption is not available on Tier-2 account. However, government employees can avail tax exemption in Tier-2 account subject to certain conditions.

You can withdraw money anytime: There are many restrictions on withdrawal from Tier-1 account. You can withdraw up to 25% of your contribution after 10 years of account opening for children’s education, marriage, treatment of serious illnesses and construction of first house, but there is no restriction on withdrawal in Tier-2 account. The member can withdraw the entire amount in lump sum at any time.

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Pension fund regulator PFRDA has eased rules for exit from National Pension Scheme (NPS). Under this, NPS members will be able to choose annuity¹/´pension plan and insurance company as per their need and choice at the time of withdrawal from the scheme. No extra fee will be charged from them for this.

PFRDA has recently issued a circular in this regard. The pension regulator has ordered the government, POPs and nodal officers of the National Pension System Trust to help NPS members choose pension plans according to their needs. With this, the beneficiaries will not have to face any kind of trouble further. The regulator has said that the annuity or pension plan selection should be based on the requirements and individual needs of the NPS members.

No additional charges: PFRDA has also clarified that the insurance company providing annuity or pension plan can charge only premium from NPS members and no other additional charges. NPS members are already paying taxes to the government, so they will not be charged any fees for other services.

This will be beneficial: Life insurance companies provide different annuity / pension plans based on the investment period and performance, which also have different annual interest rates and returns. Investors will be able to choose more profitable schemes for higher pension. Also, on the basis of market risk, they will be free to choose the pension plan.

What are the rules

If retired: After retirement at the age of 60 years, only 60% of the amount can be withdrawn from NPS in lump sum. It is tax free. The remaining 40 percent amount has to be invested in an annuity/pension plan, from which pension is received. These plans are provided by life insurance companies. However, if the total annuity corpus after retirement is less than or equal to five lakh rupees, the member can withdraw the entire amount.

In case of premature withdrawal

If an NPS member wants premature withdrawal before the age of 60 years, then he has to invest 80% of the total corpus in buying an annuity/pension plan. Only 20 percent of the amount can be withdrawn in lump sum. There is no compulsion to buy an annuity plan if the corpus at the time of premature withdrawal is equal to or less than Rs 2.5 lakh. Members can withdraw the full amount.

What is annuity / pension plan

After retirement, pension/annuity plans have to be bought from life insurance companies, which give pension to the customers on a monthly, quarterly, half-yearly or yearly basis, depending on their investment amount. The rate of interest is fixed, which is fixed at the time of investment.

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However, now the Finance Ministry has issued a clarification in this matter. The Finance Ministry said that the committee constituted on the new pension scheme is currently in its deliberation phase and has not yet reached any conclusion.

In a tweet, the Finance Ministry said that several news reports stated that the government has made a proposal to fix a certain percentage of pension for employees. The Finance Ministry said, “These news reports are false.”

During the budget session, Union Finance Minister Nirmala Sitharaman had announced setting up of a committee headed by the Finance Secretary on pension issues. The statement said that this committee is currently in the process of deliberations and consultations with stakeholders. The committee has not yet reached any conclusion.

Earlier, news agency Reuters had said in a report quoting two sources that the government is considering a change in the rules of the New Pension Scheme (NPS). This change will be in such a way that the employees can get 40-45 percent of their last salary as pension for sure.

Explain that under the new pension scheme or National Pension Scheme (NPS), the employees have to contribute 10 percent of their basic salary and 14 percent to the government. The final payment to the employees depends on the returns that pension fund gets from the market. Pension funds invest mostly in debt schemes.

In contrast, in the old pension scheme, the employee did not have to make any contribution during his job and he was guaranteed 50 per cent of his last salary as pension after retirement.

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If you invest in National Pension Scheme (NPS) or Atal Pension Yojana (APY) keeping in mind the future of you and your family, then you must be fully updated about it. Changes have been made in both NPS and Atal Pension Yojana by Pension Fund Regulator PFRDA.

After the new change, now the subscribers associated with the scheme will be able to pay the contribution through UPI (UPI Payment System). In the information given by the pension fund regulator, it was told that if the subscriber pays his contribution before 9.30 am, then it will be considered as investment of the same day.

But the amount deposited in the account after 9.30 am will be counted in the next day’s investment. Till now the subscriber could send the contribution amount through IMPS / NEFT / RTGS (IMPS / NEFT / RTGS). But after increasing its scope, now UPI can also be done. Changes in Atal Pension Yojana also Atal Pension Yojana (APY) is for the employees working in the unorganized sector.

The subscribers of this scheme get a guaranteed minimum pension of Rs 1,000 to Rs 5,000 monthly after attaining the age of 60 years depending on their contribution. Changes have been made in the Atal Pension Yojana from last October 1.

According to the new rule, income tax payers will no longer be able to apply for the Atal Pension Yojana (APY). If you invest in National Pension Scheme (NPS) or Atal Pension Yojana (APY) keeping in mind the future of you and your family, then you must be fully updated about it. Changes have been made in both NPS and Atal Pension Yojana by Pension Fund Regulator PFRDA.

After the new change, now the subscribers associated with the scheme will be able to pay the contribution through UPI (UPI Payment System). In the information given by the pension fund regulator, it was told that if the subscriber pays his contribution before 9.30 am, then it will be considered as investment of the same day. But the amount deposited in the account after 9.30 am will be counted in the next day’s investment.

Till now the subscriber could send the contribution amount through IMPS / NEFT / RTGS (IMPS / NEFT / RTGS). But after increasing its scope, now UPI can also be done.

Changes in Atal Pension Yojana also

Atal Pension Yojana (APY) is for the employees working in the unorganized sector. The subscribers of this scheme get a guaranteed minimum pension of Rs 1,000 to Rs 5,000 monthly after attaining the age of 60 years depending on their contribution. Changes have been made in the Atal Pension Yojana from last October 1. According to the new rule, income tax payers will no longer be able to apply for the Atal Pension Yojana (APY).

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The possibility of getting higher returns for investors in NPS has increased. According to pension fund regulator PFRDA, now after reaching the age of 51, subscribers will be able to put 75 per cent of their investment in equities linked to equity in Tier 1 account under Active Choice. Also, for this they will not be compelled to accept any condition like reducing their contribution.

PFRDA has said in a notification that it has changed the rules for investment in equity for Tier 1 and Tier 2 accounts. Information about the new rule has been given in a new circular. It is worth mentioning that under NPS, the subscribers get two options to invest in equities which are Auto Choice and Active Choice.

The PFRDA notification also said that with the change in the rules for investing in Tier 1 account, subscribers have been given the option to transfer 100% of the amount in the Tier 2 account to equity under Active Choice. It may be noted that at present, NPS subscribers have to choose any one registered pension fund. This is followed by four options under Active Choice – Equity, Corporate Bond, Government Security, and Alternate Assets.

What is the difference between Tier 1 and 2 account-

Two types of accounts are opened in NPS. In these, Tier 1 account is mandatory and pension is fixed on the basis of the amount deposited in it. There is an exemption to withdraw the amount only after retirement. Whereas Tier 2 account is like a savings account and it can be opened only if you have a Tier 1 account. You can withdraw money from it at any time.

Balance between risk and return

Financial advisors say that during the Corona period, there has been a lot of enthusiasm about investing in stocks and related products. Seeing the high returns, it has increased the attraction of young people as well as older people. He says the risk on investments should decrease with age. Whereas investing in stocks carries the highest risk. However, it also has high returns. This is the reason why PFRDA has tried to strike a balance between investment and risk for the shareholders.

Choose the option carefully-

Pension fund regulator PFRDA has advised that subscribers should assess their past performance and risk appetite before choosing an investment scheme or category in it. After that you should decide to invest in it. Financial advisors say that the performance should be based on at least five years rather than one year or so. Also one should compare with others in that category.

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The Pension Fund Regulatory and Development Authority (PFRDA) has recently made several changes for the National Pension System subscribers and pensioners. Here we are telling 5 changes in NPS rules that NPS account holders should know.

1. Now the commission will be available on opening

the account, the Point of Presence (PoP) opening the account of NPS will get the commission. POPs include banks, NBFCs and other entities. They register people in NPS and provide many more facilities to the subscribers. From September 1, 2022, POP will get commission from Rs 15 to Rs 10 thousand on opening the account.

2. Changes in the process of e-nomination

As per the new procedure, now the Nodal Office will have the option to accept or reject the one-time e-nomination request. If the nodal officer does not decide on the e-nomination within 30 days from the date of application, the request will be accepted through the Central Recordkeeping (CRA) system. This new rule is effective from 1 October.

3. No separate form for annuity plan

At the time of maturity, no separate form will be required to purchase annuity. IRDAI has taken this decision to relax the onboarding process for APS subscribers. Now exiting the NPS scheme will be treated as an offer to buy annuity from life insurance companies.

4. The process of submission of life certificate will be easier

IRDAI has asked insurance companies to simplify the process of submission of life certificate. It has asked insurance companies to follow Aadhaar based authentication or verification of life certificate.

5. Now Contribution will not be able to be made in Tier-II Account by Credit Card PFRDA has decided to stop the facility of payment of Contribution through Credit Card by making major changes in Tier-II Account of APS. PFRDA had given this information through a circulation on August 3. After this decision of PFRDA, the facility of payment by credit card for Tier-I account of NPS will continue, while for Tier-II account payment by credit card will no longer be possible. It is noteworthy that earlier the contribution could also be made through credit card in Tier-II account also.

What is NPS

Significantly, NPS is a government retirement savings scheme, which was launched by the central government in the year 2004. Since 2009, this scheme was also opened to people working in the private sector.

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