May 23, 2018

Latest NPS Withdrawal Rules 2019

There are certain changes in NPS withdrawal rules. What are the latest NPS withdrawal rules 2019? NPS is now a big additional tax saving investment avenue for many. For this purpose, it is important for all investors to have an eye on such changes.

Latest NPS Withdrawal Rules 2018

Before proceeding further, let us look back the basics about NPS.

NPS or New Pension Scheme is a retirement product launched by Government of India. It is managed by PFRDA (Pension Fund Regulatory and Development Authority). This product helps you to create retirement corpus.

Any citizen of India (whether resident or NRI) can invest in this scheme. The age of the subscriber must be within 18-60 years of age. However, an individual of unsound mind or existing members of NPS are not allowed to open new account.

Therefore, an individual can open only ONE NPS account.

How to open NPS Account?

You have to fill the application form and provide the relevant KYC documents at your nearest POP-PS (You will find the list in PFRDA portal).

However, if you want to open new Tier 2 account, then the process is different. You have to approach POP-PS with copy of PRAN (Permanent Retirement Account Number) and Tier 2 activation form.

The subscriber has to make the first contribution while opening the account. The minimum contribution for Tier 1 is Rs.500 and Rs.1, 000 for Tier 2.

Note-Now you can open NPS account online and also contribution can be made it online through eNPS portal. Refer my latest post on the same “eNPS – How open and invest in NPS account online?“.

What are the investment choices?

Asset Class E-Invests predominantly in the equity market. You may say high return and high risk.

Asset Class C-Invests in fixed income instruments other than Government Securities. The risk is medium in this category.

Asset Class G-Invests in Government Securities. So lower risk and lower return.

Along with that, you have two different options to choose regarding allocation.

  • Active Choice-You has the option to choose your investment among E, C or G asset classes. However, if you opted for E asset class, then the maximum equity exposure is 50% only.
  • Auto Choice-If you don’t want to take an active part in switching asset class, then PFRDA will do it according to your age. It is predefined.

You can change both scheme preference and investment choices at any point of time. But it is allowed only once in a year.

Please remember that there is no ASSURED RETURN from NPS.

Your retirement fund will be managed by fund managers appointed by PFRDA. Currently, there are six fund managers. They are as below.

ICICI Prudential Pension Funds Management Company Limited, Kotak Mahindra Pension Fund Limited, Reliance Capital Pension Fund Limited, SBI Pension Funds Limited, UTI Retirement Solutions Limited, and Annuity Service Provider (ASP).

You can change your fund manager at any point of time. This change is allowed only one time in a year.

Along with that, PFRDA tied with IRDA approved Life Insurance companies to pay the pension once the subscriber reaches 60 years of age. They are as below.

Life Insurance Corporation of India, SBI Life Insurance Co. Ltd., ICICI Prudential Life Insurance Co. Ltd., Bajaj Allianz Life Insurance Co. Ltd., Star Union Dai-ichi Life Insurance Co. Ltd., Reliance Life Insurance Co. Ltd. and HDFC Standard Life Insurance Co. Ltd.

How to exit from NPS?

Once you attain the age of 60 years, you can withdraw up to 60% of accumulation as a lump sum and rest 40% will be converted into a pension.

If you want to exit from NPS before 60 years of age, then you are allowed to withdraw only 20% accumulated amount. You have to buy a pension product with that 80% fund.

However, in case the death of the subscriber, a nominee is allowed to withdraw 100% of NPS.

Refer my earlier post in this regard to know more about NPS.

Latest NPS Withdrawal Rules 2019

Let us now discuss about the latest NPS withdrawal rules 2019.

# You can withdraw 25% accumulated corpus

You are allowed to withdraw 25% of the accumulated corpus at any time (but excluding contributions made by the employer), as on the date of application of withdrawal. Few points to note are as below.

  • The subscriber must be in the National Pension System for at least 3 years.
  • The subscriber permitted to withdraw accumulations not exceeding 25% of the contributions made by him and standing to his credit in his individual pension account, as on the date of the application for withdrawal.
  • The subscriber allowed to withdraw only a maximum of 3 times during entire tenure of subscription.
  • You must submit this withdrawal request in the specified form along with necessary documents to the central record keeping agency or the National Pension System Trust, as may be specified, for processing of such withdrawal claim.
  • If subscriber suffering from diseases, then a family member can submit the application.
  • For Tier II account, one can withdraw either partial or full amount available in this without any condition.

Purpose of withdrawal

You are not allowed to withdraw the NPS corpus as per your wish. There are certain purposes set by PFRDA. They are as below.

  • For higher education of your children including a legally adopted child (or) for self.
  • Individual NPS subscribers who wish to set up a new business or acquire a new business will also be allowed to make partial withdrawals from his contributions.
  • For the marriage of your children, including a legally adopted child
  • You can make a partial withdrawal for the purchase or construction of a residential house or flat in your name or in a joint name of your spouse. In case, you already own a residential house or flat (either individually or in the joint name), other than an ancestral property, no withdrawal under these regulations shall be permitted.
  • If you /your spouse, children, including legally adopted child or dependent parents suffer from any specified illness, a partial withdrawal request can be submitted by you or any of your family members. (Specified illness – which shall comprise of hospitalization and treatment in respect of the following disease) :
  1. Cancer;
  2. Kidney Failure (End Stage Renal Failure);
  3. Primary Pulmonary Arterial Hypertension;
  4. Multiple Sclerosis;
  5. Major Organ Transplant;
  6. Coronary Artery Bypass Graft;
  7. Aorta Graft Surgery;
  8. Heart Valve Surgery;
  9. Stroke;
  10. Myocardial Infarction;
  11. Coma;
  12. Total blindness;
  13. Paralysis;
  14. An accident of serious/ life-threatening nature.
  15. Any other critical illness of a life-threatening nature as stipulated in the circulars, guidelines or notifications issued by the Authority from time to time.
  • Such advance withdrawal will not attract any taxation. Hence, there is no tax liability for such advance withdrawal.

# You can hold and contribute to NPS corpus beyond 60 Years also but up to a maximum of 70 Yrs.

If you desire to continue in the NPS and contribute to your retirement account beyond the age of 60 years or the age of superannuation. You will have that option to do so by giving in writing or in such form as may be specified, and up to which you would like to contribute to your individual pension account but not exceeding 70 years of age.

Such option can be exercised at least 15 days prior to the age of attaining 60 years or age or superannuation, as the case may be to the central recordkeeping agency or the National Pension System Trust or any other intermediary or entity authorized by the Authority for the purpose.

If you not exercised the option within the period of 15 days, so stipulated, but desires to continue with his individual pension account under National Pension System, beyond the age of 60 years or the age of superannuation, as the case may be, and to the extent so permitted, may do so by making an application in writing with reasons for such delay to the National Pension System Trust, within 185 days of attaining such age or superannuation.

# State and Central Government Employees NPS corpus may withhold the NPS withdrawal to recover any dues from an employee

If you are an employee of State or Central Government and if there any dues pending by you to be payable to your employer, then your employer may withhold the NPS withdrawal to recover such dues.

However, such authority is available only for Tier 1 accumulated corpus but not for Tier 2 accumulated corpus.

The pension wealth which is payable under the National Pension System will not be paid to the employer until the conclusion of the departmental or judicial proceedings, as the case may be and subject to the final orders, passed in such proceedings.

37 Comments

  1. I WISH TO KNOW, SHALL I WITHDRAW INTEREST ACCUMULATED ON MY NPS.

    Reply
  2. The subscriber permitted to withdraw accumulations not exceeding 25% of the contributions made by him and standing to his credit in his individual pension account, as on the date of the application for withdrawal.
    hello sir
    suppose i withdraw 25% of the contributions & after fulfilling my need can i deposit again

    Reply
  3. sir,
    i was employee in dena bank n due to disciplinry action i got compulsory retirement at age 37 now how can i exit frlm NPS account

    Reply
    • Dear Hiren,
      At least 80% of the accumulated pension wealth of the Subscriber has to be utilized for purchase of an Annuity providing the monthly pension to the Subscriber and the balance is paid as a lump sum to the Subscriber.
      In case the total corpus in the account is less than or equal to Rs. 1 lakh as on the Date of Resignation, the Subscriber can avail the option of complete Withdrawal.

      Reply
  4. If an employee is removed / dismissed from service under Disciplinary action what will be refundable amount from the NPS contribution

    Reply
  5. Dear sir, i have prematurely withdraw from NPS in last year. Sir , what will be the tax implications on my 20% withdrawal and monthly annuity income?

    Reply
  6. Hi Sir,
    My Self Sandeep, I have a tax deduction approx. 100,000 this year can you suggest the impact of new investment in NPS. People suggest rather you can go to PPF can you please guide me so that I can save some amount for future returns.

    Reply
    • Dear Saisundeep,
      If you know my answer, then why again asking? I am against the investment where people do just because of TAX SAVING.

      Reply
  7. sir
    I want to know that can I withdraw 40% of accumulated corpus which we have invested in annuity plan?

    Reply
    • Dear Anil,
      Sadly NO (except for certain purpose like illness).

      Reply
  8. I have to withdraw money from my NPS account.. kindly suggest the procedure.. reason being surgery of my dependent father

    Reply
    • Dear Sanjeev,
      Contact the nearest point of service of your area.

      Reply
  9. When we withdrow own coontribution same time gov take back his contrubution from our accound

    Reply
    • Dear Baba,
      I am unable to understand your doubt. Can you elaborate more?

      Reply
  10. Dear sir,
    I was a central government employee and after 9.5 years of my service and I am 53 years old. I was coming under NPS scheme. I have designed due to my health problems. What is the fate of my investment in NPS? How can I withdraw the amount from my NPS account? Can I get my full invested amount or if I give up all other benefits of investment and only claim my invested amount only? If it is not possible, how can I withdraw maximum amount from NPS ?
    Please guide. Kindly send your comments on my e mail.Thanking you in anticipation.

    Reply
    • Dear Kumar,
      I already explained in detail about this. Please refer above post once again.

      Reply
  11. NOTIFICATION DATED 11 MAY N2015-CLARIFICATION——AS PER CHAPTER VII MISC.RULE 32 (V)AT PAGE 37 REGARDING FRESH NOMINATION AFTER MARRIAGE. NOMINATION BEFORE MARRIAGE SHALL BE DEEMED AS INVALID.BUT IN OUR CASE MY SON NOMINATED ME (FATHER) AND HIS MOTHER BEFORE HIS MARRIAGE.BUT MY SON DID NOT DO SO.HE UNFORTUNATELY EXPIRED.KINDLY CLARIFY WHETHER WE ALREADY NOMINATED ARE ENTITLED TO CLAIM THE FUNDS.KINDLY EXPEDITE. SURJIT SINGH MOBI.9872081803

    Reply
    • Dear Surjit,
      Your daughter-in-law will hold the valid rights over your son’s investment as she is the first legal heir of this investment.

      Reply
  12. Dear Sir,
    My mother died on march2018, in 55years of age, in service period, she was contributing to “pension scheme” and “family pension” from 20 years , can I(36yrs old male only son) claim any amount of her pension(one-time/periodical) from Coal India. Please suggest.

    Reply
    • Dear Arnab,
      I am not sure about which pension scheme. Hence, better to check with her employer.

      Reply
  13. Hi Basu,

    Thanks again for the informative article. I have a question regarding the withdrawal, As mentioned we can withdraw max 3 times 25% of accumulated amount. and after reaching 60 years of age is it 60% of amount we can withdraw?

    Basically if i accumulated 1lakh and withdrawn once 25% and after attaining 60 years can i with 60% of 75,000 or less

    Reply
  14. Hi Mr. Basu, new government employees have NPS deduction instead of EFO from their salary. What i want to know is contribution made by employer in NPS can be considered under 80C of employee. Please suggest.

    Reply
  15. Hi sir, Really very good informative blog again. Any changes in such products you are updating us which is really great and very helpful thanks a lot. Looking at new rules one can revisit his goals and do changes/plan as needed.

    Reply
  16. Dear Basu,

    Is it possible to open NPS account for my mom who is not working and 50 yrs of age and make contributions every month via online?

    Reply
    • Dear Mohan,
      She can open but do you feel it is a great retirement product?

      Reply
      • Thanks. Will look for debt or other fixed interest options

        Reply
  17. Sir………….today I have go through the multiple of answers provided by you……..all these really make me learn a lot……Thank a lot…..
    Further, Sir………I am a new comer/investor in market……..I have few query….may I have the help of your kind expertise:-
    1. I want to invest 1,50,000/- annually for tax saving purposes for 20 years and my risk taking capacity is moderate so where and in which ELSS funds should I invest.
    2. Further, I want to invest 30,000/- per month for investment purposes for 22 years and my risk taking capacity is moderate so where and in which funds should I invest.
    3. One more question, sir should I invest in Index funds or not as per the lessons of Sir Warren Buffet…..as it may validate for US market (Developed) not yet in Indian Market (Developing)
    …………………Sir please help me out I am stuck…………This is Pankaj Sharma………Mobile No……..9654508919…
    Reply

    Reply
  18. dear,BasuNivesh
    i hv two pf a/c in one company.
    company quit 1year ago.i hv go to merge then systm show hence claim can not be proceed.
    i cant under stand what should i do

    Reply

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