New Delhi: The Indian government introduced the National Pension System (NPS), a pension cum investment plan to give people security for their old age. The Pension Fund Regulatory and Development Authority (PFRDA) oversees the scheme. After turning sixty years old, the NPS members start receiving their pension. Nevertheless, before turning 60 or upon attaining superannuation, some members desire to withdraw their accumulated wealth in NPS. Let’s go into more detail on early pension withdrawal and the requirements.
Before retiring, is it possible to take partial NPS withdrawals?
Without compromising their monthly stipend upon retirement or terminating their retirement account, NPS members can take partial withdrawals from their savings to fulfill specific requirements.
Conditions for NPS partial withdrawal
A circular defining the procedures for a partial withdrawal from the NPS was released by PFRDA on January 12, 2024, and became operative on February 1, 2024. According to the circular, partial withdrawal is allowed under the following conditions:
* You can withdraw funds for your children’s higher education.
* Funds can be withdrawn for your children’s marriage.
* Withdrawal is allowed when buying a house or repaying a home loan. However, neither you nor your spouse should already own a home.
* Withdrawals could be made to pay for medical expenses and hospitalization.
* Withdraw is allowed to start a business, or pursue a startup.
* Withdrawals could be made for skill development or self-development activities.
Eligibility requirements for NPS partial withdrawal
To be eligible for partial withdrawal from your NPS account, you need to fulfill the following conditions:
* You have been an NPS subscriber for at least 3 years from the date of your joining the scheme.
* During your entire subscription period, you are permitted to make a maximum of three partial withdrawals, with a minimum gap of five years between each withdrawal.
* You can withdraw only 25% of the contribution in NPS. However, withdrawals are not permitted from the employer’s portion of the contribution or from the returns generated on contributions.
Tax benefits on partial withdrawal from the NPS account
If you are taking partial pension withdrawals, you may be eligible for tax exemption on the amount withdrawn up to 25% of the self-contribution, on such terms and conditions as may be specified by PFRDA under section 10(12B).
What is the process for partially withdrawing from NPS?
You must apply to any government nodal agency connected to the NPS and provide a self-declaration outlining the reason for the withdrawal to make a partial withdrawal. After that, the application will be sent to the Central Record-keeping Agency (CRA) for verification and processing.