Retirement is something each adult is afraid to face. With the end to cash inflow, you are worried about your as well as your dependent’s survival. It is a good suggestion to be prepared as it comes so that you can live your post retirement life stress free. Enrolling yourself in the government pension schemes is a wise decision. In this article we will be discussing about withdrawal rules of NPS i.e National Pension Scheme. It is advisable that you know the complete details of the schemes and find out if there are any loop holes. You can read about the pros and cons of a NPS account over here.
Let’s get some further insights on the withdrawal rules for NPS.
National Pension Scheme details
NPS Withdrawal Rules on Retirement
1. Government sector employee
- If an individual has invested of about 40% of the amount in annuity, then he/she is eligible to withdraw the balance (60%)in lump sum.
- He/she can decide to postpone the withdrawal and withdraw 100% till after age of 70.
- If the accumulated amount of pension is less than INR 2,00,00, then you withdraw the complete amount.
2. Corporate sector employees
- Similar to the rules pertaining to government sector employees, you can withdraw the balance lump sum on investing 40% of the amount in annuity.
- Also, you can withdraw the complete amount if the pension collected is less than INR 2,00,000.
NPS Withdrawal Rules on Voluntary Retirement
1. Government sector employees
- If government employee wishes to exit before reaching the age of 60, he/she should invest at least 80% in annuity.
- If an employee has accumulated less than 1 Lakh, he/she is eligible to withdraw the whole amount.
2. Corporate sector employees
- In case of voluntary retirement,a corporate sector employee can withdraw only if account is active for at least 10 years.
- Also, he/she can withdraw only if 80% is invested in annuity.
- Similar to the previous sets, if the accumulated amount is less than 1 Lakh, he can withdraw the complete amount.
NPS Withdrawal Rules in Event of Death
If the applicant passes away before reaching the retirement age, the legal heir/ nominee of the applicant will receive the complete amount. There will also be no purchase of any yearly or monthly annuity.
Partial withdrawal rules
- Partial withdrawal is only available to subscribers who have been active for more than 10 years.
- Any subscriber can withdraw only 3 times with a 5 year gap between two withdrawals.
- In special cases, like education of his/her children, marriage expenses, house construction or medical emergencies, you can withdraw the amount partially.
- Medical emergencies listed are like Cancer, Kidney Failure, Graft, Aorta Graft Surgery, Heart Valve Surgery, Multiple Sclerosis, Major Organ Transplant, Coronary Artery Bypass, Stroke etc.
- You can withdraw partially only on the principal amount. You cannot withdraw on interest earned on the account. Therefore, one can withdraw 25% of the amount contributed to the NPS account and not the total account balance.
You can visit NSDL Page for further insights and queries on withdrawal plans of NPS.
Want to open a NPS account? Find all the details over here.
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