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National Pension Scheme is a pension scheme launched by the government of India. Under this scheme, subscribers will have to make regular contributions to a pension account during their working years. Upon retirement, they can withdraw a part of the corpus (in a lump sum) and use the rest to avail an annuity that will provide a regular income post retirement. A normal exit from NPS can be made at the age of 60. However, early exit is permitted under certain conditions. According to the Pension Fund Regulatory & Development Authority Exit Rules, withdrawals under below categories are allowed:
NPS offers two kinds of accounts - Tier I and Tier II. To invest in NPS, it is compulsory for one to open a Tier I account. There are certain conditions that must be met to be able to make partial withdrawals from a Tier I account. As per the current rules, an individual can withdraw up to 25% of his or her own contribution. The limit remains the same for each of the specified situations where the withdrawal is permitted. A Tier-II account can only be opened once the subscriber has opened a Tier I account. There are no restrictions with regards to withdrawals from a Tier II account.
NPS subscribers who would like to initiate online withdrawal can do so by logging in to their NPS account. The request would have to be verified and authorized by the associated POP. In the event that the subscriber cannot initiate online withdrawal request, he or she would have to provide the physical withdrawal form with the required documents to the POP. Following this, POP shall initiate the online withdrawal request on the subscriber’s behalf. It must be noted that the withdrawal proceeds will get credited in subscriber/claimant’s bank account via the electronic mode only.
Forms for NPS withdrawals can be found on the website of NPS - NSDL. Following are the forms made available on the site:
The conditions pertaining to partial withdrawal are as under:
A subscriber can check his or her withdrawal status as per the below options:
An entity can check through the ‘Limited Access View’ (Pre Login) functionality, which is available at CRA website's home page.
The user can also check the status under the menu ‘Exit Withdrawal Request’>>'Withdrawal Request Status View’ by logging into the NPS account.
Can we withdraw NPS amount?
Yes, NPS allows a maximum of three partial withdrawals, not exceeding 25% of the total contribution for emergencies.
Can an NPS subscriber withdraw lump sum amount in a phased manner?
Yes, the facility of phased withdrawal is available for NPS subscribers. The individual can opt for withdrawal of lump-sum amount in a phased manner (up to 10 instalments) over the period from 60 years (or any other retirement age as stated by the employer) to 70 years. However, the subscriber will have to avail annuity before phased withdrawal.
Can NPS be withdrawn anytime?
The first partial withdrawal is allowed after three years of NPS account opening. The second and third partial withdrawal can be opted anytime after the first partial withdrawal is done.
What is the process of NPS withdrawal?
Individuals who would like to initiate online withdrawal can do so by logging in to their NPS account. The request would be verified and authorized by the associated POP. If the subscriber is not able to initiate the online request, he or she can provide the physical withdrawal form with the required documents to the POP. Once this is done, POP will initiate the online withdrawal request on the subscriber’s behalf.