NPS: You can now take a loan against your NPS account; rules have been changed. Know all the details...

Pension fund regulator PFRDA has provided significant relief to working individuals by making significant changes to the National Pension System (NPS) rules. You can now remain in the NPS scheme until you reach the age of 85. The most significant change is that the limit for purchasing an annuity (pension plan) has been reduced to 20%. A new feature, Systematic Unit Redemption (SUR), has been introduced. These changes apply to both government and non-government employees and NPS-Lite subscribers. Let's learn more about these significant changes.

You can now remain in NPS until you reach the age of 85.

The government has increased the maximum age for remaining in NPS from 75 to 85. You can keep your money invested until you reach the age of 85.

Only 20% of the corpus will need to be invested for the pension.

Private sector employees can now use at least 20% of their corpus to purchase an annuity upon retirement or under certain conditions. Previously, if your corpus exceeded ₹5 lakh, you had to use at least 40% to purchase an annuity. Simply put, you will now have more cash available.

Exemption for deposits up to ₹8 lakh

If the total corpus is ₹8 lakh or less, you can withdraw the entire amount in one go. However, government employees will have the option to invest 40% of their corpus in an annuity if they wish. Private employees, on the other hand, will have to use at least 20% of their corpus for annuity (if they do not withdraw the entire amount).

New method of installment withdrawal

The government has introduced a new method of withdrawal called Systematic Unit Redemption (SUR). This is similar to a mutual fund's SWP (Systematic Withdrawal Plan). This facility is for those with funds between ₹8 lakh and ₹12 lakh. They can withdraw up to ₹6 lakh in one lump sum and the remaining amount in installments through SUR. The condition is that the SUR holder must withdraw the money in installments for at least six years.

What if the funds are between ₹8 lakh and ₹12 lakh?

Government employees have three options: First, withdraw ₹6 lakh in one lump sum, and the remaining amount through SUR (installments) over the next six years. Second, withdraw ₹6 lakh in cash and purchase a pension plan with the remaining amount. Third, withdraw 60% of their retirement fund in tax-free cash and purchase an annuity with at least 40%. For private employees, the first two options are similar, but there is one difference: they can withdraw 80% of their funds in cash and must purchase an annuity with only 20%.
More withdrawals before age 60

NPS subscribers can now withdraw funds up to four times before the age of 60 or retirement. Previously, this limit was only three. The condition is that there must be a gap of at least four years between withdrawals.

Withdrawal Rules after 60

Those who remain in the NPS even after the age of 60 or retirement can also withdraw funds intermittently. However, there must be a three-year gap between withdrawals. Under this option, you can only withdraw a maximum of 25% of your own deposited funds.
On Renouncing Citizenship

If a subscriber renounces Indian citizenship, they can withdraw their entire deposit in one lump sum.
Relief for Family in Case of Disappearance

If an NPS subscriber goes missing or is presumed dead, their nominee or legal heir will be immediately given a lump sum of 20% of the total deposited funds as interim relief. The remaining 80% will remain invested and will be given upon legal death.

Each account has a unique identity.

The term "Individual Pension Account" has been used instead of "Permanent Retirement Account."

Loan facility

Now, a loan can be taken from a bank by collateralizing an NPS account.

Disclaimer: This content has been sourced and edited from Navbharat Times. While we have made modifications for clarity and presentation, the original content belongs to its respective authors and website. We do not claim ownership of the content.