New rules for partial pension withdrawal from February 1
What's the story
The Pension Fund Regulatory and Development Authority (PFRDA) in India has announced new provisions for partial withdrawals under the National Pension System (NPS). According to the updated guidelines, starting February 1, 2024, the subscribers will be able to withdraw up to 25% of their personal contributions from their pension accounts. However, this will exclude their employer's share.
Rules
Eligibility criteria for partial withdrawals
These partial withdrawals are allowed for specific reasons. They include higher education and marriage costs for the subscriber's children, disability-related costs, and skill development or re-skilling expenses. Purchasing or constructing a residential property, medical expenses for certain illnesses, and funding a new venture or start-up, are also included. To qualify, subscribers must have been NPS members for at least three years, and can make up to three partial withdrawals throughout their subscription period.
Conditions
Important points to keep in mind
NPS members should note that the withdrawal amount must not exceed one-fourth of their total contributions toward their pension account. Also, in case of subsequent partial withdrawals, only incremental contributions made from the date of the previous partial withdrawal will be permitted.
Steps
Withdrawal request process and verification
To request a withdrawal, subscribers must submit an application and a self-declaration stating the reason, to the Central Recordkeeping Agency (CRA) via their point of presence or respective government nodal office. The CRA will only process requests after successfully verifying the subscriber's bank account via methods like penny drop. In this procedure, CRAs deposit a small sum into the subscriber's bank account and confirm if the name matches, before processing any withdrawal request or making changes to account details.