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Learn About the Rules Regarding Exit From National Pension System

Learn About the Rules Regarding Exit From National Pension System



Investing for retirement is a long-term commitment and a very critical one too. At the time of investing, you want some clarity on the rules of exit from the scheme. The exit/withdrawal-related rules are contained in the PFRDA (Exits and Withdrawals under NPS) Regulations, 2015, as amended from time to time. This article explains the finer details regarding exit options from NPS to help you make an informed decision.

Rules regarding exit from NPS

The rules depend on the timing of exit and the subscriber’s status (government/ non-government). They are captured in the below tables for easy understanding:



Note: Default Annuity Scheme has following features:

  1. Annuity for life, of the subscriber and spouse, with a provision for return of purchase price

  2. Upon the demise of such annuitants, the annuity is re-issued to the family members.

  3. After the coverage of the family members, the purchase price shall be returned to the surviving children of the subscriber or the legal heirs as applicable.


Conclusion

Recent changes in the NPS exit rules to provide for lumpsum withdrawal will help in making NPS more accessible to specific sections of society. At the same time, the rule regarding the minimum annuity requirement helps NPS retain its character as a true blue retirement product. Investors can understand these provisions and accordingly decide to invest in this scheme from a long term perspective.

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