Find the conditions applicable on NPS Withdrawal for employee before and after retirement for partial / premature withdrawals and exemptions allowed for withdrawal…
National Pension Scheme, a program launched by the Government of India to secure the future of employees after their retirement. The scheme fully monitored by Government agencies and as well fully secured. The main motto of the scheme is to provide financial benefit for an individual after their retirement period.
The amount gets accumulate during their service period and applies with Government provide interest rate every year to make the huge investment amount.
The scheme fully established to get good benefit to every individual, after the age of 60 years set for Superannuation. An individual will not have any way of income and the National Pension Scheme will actually provide the service.
NPS Withdrawal Rules
There are different categories for Government sector based on which rules for NPS withdrawal deferred and applied.
Rule for Government Sector Subscriber
- In government sector subscribers who will be retiring at age of maturity, the subscriber will have full option to withdraw the lump sum amount from their balance. The individual must have invested a minimum of 40 percent of the amount from their annuity.
- The Lump Sum amount may put on hold till age of 70 years after retirement and the interest for the middle tenure applied, and added to the lump sum amount which increases its value.
- If the amount of pension is less than 2 Lakhs, the individual will have the option to withdraw the full amount at once.
Rule for Voluntary Retirement
- If a government sector employee who subscribe to NPS has taken voluntary retirement, then a minimum of 80% of the amount may invested in the annuity.
- The full amount of the National Pension Scheme withdrawn if the subscriber pension is less than 1 Lakhs irrespective of their reason for retirement.
Rule for Death of Government Subscriber
If the death of the subscriber occurs before attaining the age of retirement, then the complete amount may given to the legal heir or nominee of the subscriber as per government records.
Rule for Corporate Sector and Citizen for Retirement
- An individual has to invest over 40 percent in an annuity. It is all to get an option to withdraw the balance amount one they reach their retirement age.
- Lump Sum amount after retirement postponed till the age of 70 years. The interest accumulated added to the full amount.
- The individual can withdraw a lump sum amount without adding to annuity if their pension is less than 2 lakhs
Rule for Corporate Sector and citizen if Voluntary Exit
- In case the individual has retired voluntarily then it is mandatory to be with National Pension Scheme for at least 10 years of tenure
- 80% amount must add in annuity and getting an option of NPS withdrawal of balance left out amount
- If the pension for the National Pension Scheme amount is less than 1 lakh, then subscribers can withdraw the full lump sum amount.
Rule for Death of Corporate Employee or citizen
In case of death, the nominee or legal heir of the corporate employee or citizen will have an option to fully withdraw the lump sum amount as per the eligibility percentage.
NPS Partial Withdrawal
There are other options that both the government sector, corporate sector and citizens. They can opt for with respect to the National Pension Scheme withdrawal. The options must check to know the rule for partial withdrawal of NPS amount.
- An subscriber can withdraw the National Pension Scheme amount only for 3 times in their tenure
- There must be 5 years of minimum gap that need to maintain between 2 withdrawals being made from NPS amount
- An option of withdrawal of only 25 percent of amount will be available form the entire contribution accumulated in account
- The subscriber must be a member of scheme for more than 3 years of term eligible for partial withdrawal
- NPS Partial withdrawal will only be applicable if the individual has reason for education, marriage, house contribution or medical emergencies.
NPS Premature Withdrawal
There are two different accounts which consider in National Pension Scheme as Tier 1 and Tier II. It is based on which NPS withdrawal for premature tenure applicable.
- NPS Tier I: There was a lock on NPS accounts before 2011 which played till the age of 60 years. Later on the pension fund regulatory and development authority reviewed the term and made it 15 years. It is minimum to withdraw the amount from NPS. Once a 25 years of term reached, an individual eligible to withdraw over 50% of the amount from lumpsum accumulated.
- NPS Tier II: A subscriber of a Tier II account will have the withdrawal permitted for unlimited times. The NPS account easily compared to any banking savings account. The rules of NPS withdrawal similar, but the reason may selected from applicable types without any restriction as Tier I.
National Pension Scheme Exemptions for Withdrawal
As per the regulations, the amount of National Pension Scheme may withdrawn with a gap of 5 years. These rules exempted in case of emergency.
Stroke, Sclerosis, Cancer, Kidney failure, heart valve surgery, primary pulmonary arterial hypertension, aorta graft surgery, major organ transplant, paralysis, coma, total blindness, myocardial infarction and any critical illness.
- What is amount allowed for NPS withdrawal?
As per the government regulations, 25% of National Pension Scheme amount may withdrawn from the total amount based rules of withdrawal. The partial amount withdrawn from the principal amount and interest earned on these amounts withdrawn. The total amount withdrawn until the age of maturity attained by the subscriber.
- Reason for National Pension Scheme Withdrawal?
The National Pension Scheme authority will only approve the withdrawal, if the withdrawal of partial amount requested though the reason of child’s higher education, child’s marriage, trenet of critical illness of self, spouse or children’s or dependent parents, house construction or renovation of house and fatal accidents.
- National Pension Scheme Withdrawal Forms?
The withdrawal forms for NPS found from the Forms section and there are forms available for Death, Premature and Superannuation. This may select as per their eligibility criteria. Find / download the form online.
- What is meant by Annuity in NPS?
The annuity refers to the amount added monthly in the NPS account from the Annuity Service provider. The amounts calculated during withdrawal and calculation of the total lump sum amount at the time of withdrawal.