Corporate sector employees saving through the National Pension System (NPS) can now withdraw a bigger chunk of their retirement savings upfront. The Pension Fund Regulatory and Development Authority (PFRDA) has increased the withdrawal limit for non-government subscribers, allowing up to 80% of the corpus to be taken as a lump sum, up from the previous 60%.
Here's what the new rules mean for you, if you're a private sector employee investing in NPS:
1. Higher Withdrawal Limit at Retirement
If your NPS corpus exceeds Rs12 lakh at retirement, you can now withdraw up to 80% of it as a lump sum, with only 20% going into an annuity. Earlier, you could withdraw only 60% and had to buy annuities with the remaining 40%.
For example, if your total corpus is Rs15 lakh:
- You can now take Rs12 lakh in cash (80%)
- The remaining Rs3 lakh goes into an annuity plan
- This change gives you more liquidity and control at the time of retirement.
2. Full Withdrawal for Smaller Savings
If your total corpus is Rs8 lakh or less, and you've either turned 60 or completed 15 years of contributions, you can withdraw the entire amount. No annuity purchase is required.
For corpus between Rs8 lakh and Rs12 lakh, you're allowed to withdraw up to Rs6 lakh as a lump sum. The rest must be used to buy annuities.
3. You Can Stay Invested Until 85
Previously, there was a cap on how long you could stay invested in the NPS. Now, subscribers can continue their investment until the age of 85, unless they choose to exit earlier. This benefits those who want to delay withdrawal or annuity purchase to manage tax or income needs.
4. In Case of Death or Missing Subscriber
If a subscriber passes away before making withdrawals or buying an annuity, the entire corpus goes to the nominee or legal heir.
If a subscriber is missing and presumed dead, 20% of the amount will be given as interim relief, and the balance released after legal confirmation under the Bharatiya Sakshya Adhiniyam, 2023.
5. No Change for Government Employees
Government employees under NPS will continue under the old rule: 60% lump sum withdrawal, 40% annuity purchase.
