Source: TOI
Context:
The Pension Fund Regulatory and Development Authority (PFRDA) has revised NPS withdrawal rules, allowing private sector subscribers to withdraw up to 80% of their accumulated corpus, instead of the earlier 60%. The remaining 20% must be used to purchase an annuity to generate pension income.
Key Changes:
- Withdrawal limit raised:
Earlier: 60%
Now: 80% of corpus can be withdrawn - Subscriber age limit extended:
NPS account can now be continued up to 85 years, up from 75 years earlier - Systematic Redemption:
Regulator reiterates option for systematic unit redemption, similar to mutual fund SWP
Can be used only within the 80% withdrawal limit - Withdrawal frequency increased:
Four withdrawals permitted before age 60, instead of three earlier
Can be used for needs such as education, home purchase, or wedding expenses
Tax Clarity Pending:
- Currently, only 60% withdrawal is tax-free
- Govt may amend laws to make 80% withdrawal tax-free
Revised Eligibility Criteria:
- Applicable to:
Subscribers with 15+ years in NPS OR
Subscribers retiring from service
Full Withdrawal Limit Revised:
- Full withdrawal allowed if corpus ≤ ₹8 lakh (earlier limit ₹5 lakh)
- Change made because annuity providers require at least ₹2 lakh purchase value
For Corpus Between ₹8–12 Lakh:
Subscribers can:
- Withdraw up to ₹6 lakh as lump sum, OR
- Opt for periodic payouts via systematic withdrawal
