Just like systematic withdrawal plan (SWP) of mutual funds, PFRDA has proposed the introduction of Systematic Lumpsum Withdrawal (SLW). This will enable NPS (National Pension System) subscribers to stay invested with their lumpsum benefit that they get after attaining retirement to generate regular income till 75 years of age.
Currently, NPS subscribers get lumpsum benefit of 60 percent of the total accumulated corpus and the remaining amount goes to insurance companies for extending annuity support.
Also, subscribers are allowed to remain invested with their lumpsum benefits till 75 years but they are allowed to make withdrawal once a year. Also, they need to make such requests every year.
With this, NPS subscribers will be able to make withdrawal every month, quarter, half yearly or annually with a single application. However, subscribers will not be able to make partial withdrawal if they opt for this.
For Tier-II accounts also
Systematic Lumpsum Withdrawal can also be set up on Tier II accounts at any time. There is no need to wait till 60 years to generate regular income in Tier II NPS accounts. This benefit is not applicable on the death of NPS subscribers.
“In the interest of Subscribers and ease the process of lump sum withdrawal, PFRDA proposes that the lump sum can be paid systematically on a periodical basis viz monthly, quarterly, half yearly or annually for a period till 75 years as per the choice of the Subscriber. Further, the process can be automated based on one-time request that can be captured online/offline,” PFRDA said in a draft circular.
Subscribers opting for SLW will also be allowed to modify, cancel or redeem entire funds. In addition, units available post 75 years will be credited to subscribers’ account.