PFRDA Eases NPS Rules, Allows Higher Withdrawals and Longer Account Tenure
NPS Partial Withdrawal Rules: In a major relief to non-government NPS members, the Pension Fund Regulatory and Development Authority (PFRDA) has changed the withdrawal rules. Account holders will now be able to withdraw up to 80% of their funds, and the withdrawal age has been raised to 85 years. Loans against NPS accounts will also be available.
There is important news regarding the relaxation for the non-government members in the National Pension System. Now, the members holding accounts in the NPS are allowed to withdraw 80% of the amount at one time. Before the change, the withdrawal was allowed up to 60%. This move is expected to provide relief to millions of employees in the private sector along with the self-employed individuals. This is crucial in making the pension system flexible.
The Pension Fund Regulatory and Development Authority (PFRDA) has modified the terms and conditions for withdrawals from an NPS account, increasing the maximum age limit for withdrawal to 85 years, which was previously 70 years. This will enable subscribers to utilize their accounts for a longer period and draw money as and when needed. Previously, it was mandatory to purchase an annuity from the remaining 40% of the corpus, which provided a monthly pension, but this requirement has now been relaxed.
The new rules also allow financial institutions to take loans against NPS accounts within a prescribed limit. This will make it easier for account holders to access loans in times of need, eliminating the need to break their pension savings. This facility is considered particularly beneficial for those who require a large sum before or after retirement.
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According to the PFRDA, if an NPS account holder's total pension fund is less than ₹8 lakh, they can withdraw the entire amount in one lump sum. Additionally, subscribers will have the option to receive payments through lump sum withdrawals or unit redemptions at regular intervals. This will ease pension-related complexities for small investors and allow them to withdraw funds as needed.
The regulator has also relaxed the rules regarding partial withdrawals. The previous maximum limit for partial withdrawals was three, which has now been increased to four. A four-year gap will be required between each partial withdrawal. After the retirement age of 60, partial withdrawals can be made three times at a minimum interval of three years. This change will prove very helpful in times of emergency, medical treatment, or family needs.
Experts believe that these changes to the NPS will make the pension system more attractive and practical. Higher withdrawals, longer age limits, and loan facilities are likely to increase investment in the NPS. It is believed that this will strengthen the financial security of the elderly in the future and increase public confidence in pensions.
