Under the new rule, NPS subscribers can withdraw money from their investments as per their need instead of a lump sum amount. If you are an NPS subscriber, then you will be able to withdraw the maturity amount on monthly / quarterly / half yearly or yearly basis as per your need. Let us know what is the Systematic Lumpsum Withdrawal (SLW) implemented by PFRDA?

What is systematic lumpsum withdrawal?

Under Systematic Lumpsum Withdrawal (SLW), you will be able to withdraw your money on monthly / quarterly / half yearly basis as per your need till the age of 75 years. Earlier there was a facility to withdraw this money on annual basis. Under the rules of PFRDA, the investor will have to request through online or offline mode after the lump sum payment option is activated. In this, you will have to mention how you want to withdraw the money, start date, end date etc. After SLW is activated, you cannot make any investment in your NPS account.

What will be the benefit?

If you choose SLW option, you will continue to have liquidity. NPS customers will be free to choose a lump sum amount along with systematic withdrawals for around 60% of their corpus fund. Apart from this, 40% will be used to buy annuity option. SLW facility will be available on Tier-1 account. The money withdrawn through this will be completely tax free. However, no change has been made in the rules of annuity.

How to apply:

If you are an NPS subscriber, you will have to apply for SLW option in online or offline mode. Customers will have to tell when they want to start this facility and when they want to end it? Apart from this, it will also be necessary to tell them that they want money on some account. The remaining amount after every payment will remain invested in NPS. You will also continue to get returns on this money.

What is the rule now?

You can withdraw 60 percent of the total amount deposited in NPS at one go. But it is necessary to buy an annuity plan for pension with the remaining 40 percent amount. You can withdraw 60 percent of the amount now at one go or on an annual basis. For this, the subscriber is required to apply every year.

On behalf of PFRDA, NPS officials have been asked to provide information about the new facility (SLW) to investors who will soon complete 60 years of age or wish to exit the scheme. On October 27, 2023, PFRDA had issued a circular giving information about the lumpsum withdrawal option. With the introduction of this facility, you will get many benefits.

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Pension Fund Regulatory and Development Authority (PFRDA) chairman Deepak Mohanty said that National Pension System (NPS) subscribers are expected to get the option of Systematic Lumpsum Withdrawal (SLW) by the end of this quarter. Systematic lumpsum withdrawal feature will allow NPS subscribers to opt for periodic withdrawals on monthly, quarterly, half-yearly or yearly basis till the age of 75 years.

Current rules for NPS withdrawal

At present, an NPS subscriber can withdraw up to 60 per cent of the retirement corpus as a lump sum when he turns 60. The remaining 40 percent of the corpus essentially goes into buying an annuity. NPS subscribers also have the option to defer the lump sum withdrawal till the age of 75 years.

NPS investors also get the option of phased withdrawals annually while postponing the lump sum withdrawal. Under this, the NPS subscriber can make partial withdrawals on an annual basis, but he has to submit an application every year.

NPS subscribers can opt for period pension

Pension fund regulator is now going to give NPS subscribers the option of withdrawal on monthly, quarterly, half-yearly or yearly basis till the age of 75 years instead of not allowing NPS subscribers to withdraw 60 per cent of the corpus Is. Despite this withdrawal option, the remaining NPS corpus will continue to be invested and returns will continue to accrue till the corpus is fully withdrawn.

Systematic withdrawal facility for Tier-I and Tier-II accounts also

Deepak Mohanty, chairman of the Pension Fund Regulatory, told that when NPS subscribers retire at the age of 60, they can take 60 percent in one go. Apart from this, he can choose the Systematic Lumpsum Withdrawal option for the next 15 years. On choosing the Systematic option, the NPS subscriber will continue to receive monthly, quarterly or half-yearly amounts till the age of 75 years. He said that this facility will be provided for both Tier-I and Tier-II accounts. For Tier II accounts, the Systematic Lump Sum Withdrawal option can be initiated before the subscriber turns 60 years old.

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