NPS Partial Withdrawal: A Deep Dive into the Latest Rules

National Pension System (NPS) is designed for long-term wealth creation, but life brings unforeseen circumstances. Explore the recent rules and guidelines for making partial withdrawals, ensuring you are well-informed about accessing your NPS corpus when needed.

NPS Partial Withdrawal: The Latest Rules Described Here

Introduction: Contributing to NPS is a strategic move for long-term financial goals, but flexibility is crucial. The Pension Fund Regulatory and Development Authority (PFRDA) has laid down rules for partial withdrawals, allowing subscribers to access up to 25 percent of their individual pension account contributions. Delve into the specific scenarios and guidelines governing these withdrawals.

Reasons for Partial Withdrawals: PFRDA’s master circular outlines valid reasons for partial withdrawals, including:

  1. Higher Education: For the subscriber’s children, including legally adopted children.
  2. Marriage: Expenses related to the marriage of the subscriber’s children.
  3. Home Purchase or Construction: In the subscriber’s name or joint name with their legally wedded spouse.
  4. Medical Expenses: Treatment of specified illnesses and hospitalization for critical diseases.
  5. Disability: Medical expenses arising from a disability.
  6. Skill Development: Expenses incurred by the subscriber for skill development.
  7. Venture or Start-ups: Expenses for establishing the subscriber’s venture or start-ups.

Subscriber’s Eligibility: To be eligible for partial withdrawal, the subscriber must:

  • Have been an NPS member for a minimum of three years.
  • The withdrawal should not exceed 25 percent of the total contributions in their individual pension account.
  • Only three partial withdrawals are allowed during the entire subscription tenure under the NPS.

Withdrawal Process: The subscriber needs to submit a withdrawal request with a self-declaration of the purpose to the central recordkeeping agency (CRA) through their nodal office or point of presence. The Point of Presence or Government Nodal Office will then process the withdrawal request upon verification.

Conclusion: Understanding the rules governing partial withdrawals from NPS is vital for subscribers. It provides the flexibility to address specific financial needs while maintaining the long-term focus of the pension scheme.

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