PFRDA Allows Up to 80% NPS Withdrawal

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  Now: 80% of corpus can be withdrawn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