Now, NPS investors can withdraw their funds without waiting five years. Previously, subscribers were required to remain invested for at least five years, but with the new rules, this requirement has been completely eliminated.
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NPS Withdrawal Rules: Pension regulator PFRDA has made major changes to make the National Pension System (NPS) even more flexible and attractive. Let us tell you that the main objective of the government is to provide major relief to non-government investors under the All Citizen Model. Now subscribers will not have to wait for years for their money. After these changes, not only has the exit process become easier, but old restrictions like lock-in period have also been removed. Experts believe that with these reforms, NPS will no longer remain just a retirement plan but will become a smart investment option useful in times of need.
5-Year Lock-In Waiver and Early Exit
The biggest relief under the new rules is the lock-in period. Previously, it was mandatory to remain invested for at least 5 years to exit NPS, but now this limit has been completely removed. Investors can now exit the scheme even before the five-year period has been completed. Furthermore, the vesting period rules have also been relaxed. Subscribers can now exit the scheme after 15 years of investment or at the age of 60. Previously, this requirement had to be met until the age of 60.
More cash on hand
PFRDA has strengthened investors’ financial standing by increasing the lump-sum withdrawal limit. Subscribers can now withdraw up to 80% of their corpus at once, compared to only 60% previously. The annuity purchase limit has been reduced from 40% to 20%. This means that at the time of retirement or exit, investors will have significantly more cash on hand than before, which they can use for their needs.
Tax benefits and simplified rules for nominees
Tax-wise, 60% of the 80% withdrawn corpus will be completely tax-free, and 20% will be used to purchase an annuity. In the event of the subscriber’s demise, the nominee can withdraw the entire corpus in a lump sum or choose to purchase an annuity for pension. Note that the retirement age rules for corporate sector subscribers remain the same.
