NPS partial withdrawal new rule effective from February: What's different?
PFRDA introduces new provision for partial withdrawals from NPS
The Pension Fund Regulatory and Development Authority (PFRDA) has introduced a new provision allowing National Pension System (NPS) subscribers to make partial withdrawals for specific purposes, effective from February 1.
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What is the new eligibility, limit, frequency for NPS partial withdrawal?
To avail partial withdrawal, the subscriber must meet the following criteria:
1. Be an NPS member for a minimum of three years from the joining date.
2. The partial withdrawal amount should not exceed 25 per cent of the subscriber's total contributions in their individual pension account, excluding the employer's contribution, as of the withdrawal application date. Returns on contributions are not eligible for partial withdrawal.
3. A subscriber can make a maximum of three partial withdrawals during their entire subscription tenure. For subsequent withdrawals, only incremental contributions made since the previous withdrawal are allowed.
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New reasons admissible for partial withdrawals
The National Pension System (NPS) now allows subscribers to make partial withdrawals for various reasons, including:
1. Higher education of the subscriber's children, including legally adopted children.
2. Marriage expenses for the subscriber's children, including legally adopted children.
3. Purchase or construction of a residential house or flat in the subscriber's name or jointly with their legally wedded spouse. However, no withdrawal is permitted if the subscriber already owns a residential property (excluding ancestral property).
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4. Treatment of specified illnesses such as cancer, kidney failure, primary pulmonary arterial hypertension, multiple sclerosis, major organ transplant, coronary artery bypass graft, aorta graft surgery, heart valve surgery, stroke, myocardial infarction, coma, total blindness, paralysis, serious/life-threatening accidents, and Covid-19.
5. Medical and incidental expenses due to the subscriber's disability or incapacitation.
6. Expenses for skill development/re-skilling or any other self-development activities.
7. Expenses for establishing the subscriber's own venture or any start-ups.