Investors parking money in the National Pension Scheme (NPS) are in for a surprise as the Pension Fund Regulatory and Development Authority (PFRDA) announced new rules regarding fund withdrawals. To start with,
Starting January 1, 2023, the online partial withdrawal from the National Pension System (NPS) account via self-declaration will be unavailable to government sector subscribers. This change in the partial withdrawal rule affects NPS subscribers from the central government, state governments, and central and state autonomous bodies. All government sector subscribers must now submit their requests through their associated nodal offices, according to the new mandate by the PFRDA. However, the partial withdrawal facility via self-declaration will remain available to voluntary non-government NPS subscribers.
The PFRDA in a circular on December 23, 2022, shared, “With the abating of the pandemic-related difficulties & relaxation of lockdown restrictions, the issue examined after taking into consideration of the prevalent practices, circumstances, and law, it has been decided to make it mandatory for all the Government sector subscribers (central/state govt & central/state autonomous bodies) to submit their requests through their associated nodal offices.”
“The subscribers belonging to the voluntary segment of the NPS (all citizens and corporate) may continue to use the process as mentioned in the cited circular,” added PFRDA.
The partial withdrawal rules are however subject to the following conditions.
- Subscribers must have been investing in NPS for at least three years.
- The withdrawal amount should not exceed 25 percent of the NPS subscriber's contributions.
- The PFRDA allows a maximum of three partial withdrawals during the NPS subscription's lifetime.
- Withdrawal is only permitted for the reasons specified, for example:
- -Children’s higher education
- -Children’s marriage
- -Buying or constructing a residential property
- -Treatment of critical illness
