NPS Withdrawal rule: New rules to allow installment-based withdrawals instead of lump sum

 

National Pension System (NPS) subscribers can expect significant changes in the near future, as the pension regulator plans to revamp the NPS Withdrawal Rules to provide a guarantee of minimum returns.

The Pension Fund Regulatory & Development Authority (PFRDA) is reportedly preparing to introduce Systematic Lumpsum Withdrawal (SLW) as an option for NPS subscribers. This will allow them to withdraw their funds in installments according to their convenience, providing flexibility in managing their finances.

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PFRDA Chairman Deepak Mohanty mentioned that with the systematic lumpsum withdrawal facility, NPS subscribers will have the choice to make periodic withdrawals on a monthly, quarterly, half-yearly, or yearly basis. This option will be available until the age of 75.

Currently, NPS subscribers can withdraw 60 percent of their funds as a lump sum at the age of 60, while the remaining 40 percent is utilized to purchase an annuity. However, under the proposed rule changes, subscribers can defer the lump sum withdrawal until the age of 75 and instead opt for installment-based withdrawals. This will allow them to withdraw the required amount by making an annual request.

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The revised rules will particularly benefit NPS subscribers who prefer not to withdraw a lump sum amount. In such cases, they can continue to earn returns on the remaining funds as per NPS regulations. Both Tier-1 and Tier-2 subscribers of NPS will enjoy the advantages of the new rules. The PFRDA chairman anticipates that the implementation of these changes could take place by the end of this quarter.

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Furthermore, the PFRDA is also working on the Minimum Assured Return Scheme (MARS) under NPS. This scheme aims to provide a guaranteed minimum return to subscribers. However, it is important to note that the introduction of this scheme may lead to increased costs for NPS subscribers.

Source :
Msn

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