NPS Withdrawal Online: All You Need To Know
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Retaining your financial independence even after retirement is crucial. Investing in the best pension plan in India can help you get one step closer to this goal. The National Pension System (NPS) is one such scheme that can help you secure your post-retirement finances.
What is the National Pension System (NPS)?
NPS is a voluntary retirement savings scheme by the Indian government. It provides a lump sum amount and monthly pension for life. Regular contributions are required until age 60. Withdrawal and partial premature withdrawal options add flexibility. Two account types exist: Tier-I (mandatory) and Tier-II (optional with Tier-I). Withdrawal rules depend on the account type.
NPS Withdrawal Rules
The Pension Fund Regulatory and Development Authority (PFRDA) is the entity responsible for supervising and regulating the National Pension System. The PFRDA has laid out several rules regarding the withdrawal of funds from an NPS account. Here’s a closer look at some of the key NPS withdrawal rules and regulations.
Withdrawal at the Age of 60At 60 years of age, you can withdraw up to 60% of NPS corpus as a lump sum. The rest is used to buy an annuity plan for regular pension payments. If the corpus is ≤Rs. 5 lakhs, full withdrawal is allowed.
Withdrawal in the case of Premature ExitPremature exit from NPS is possible after 5 years. Withdrawal is limited to 60% of the total corpus, but 100% is allowed if corpus ≤Rs. 2.5 lakhs.
Partial Premature WithdrawalAlternatively, you may also opt for partial withdrawal without exiting the National Pension System. In this case, you can only withdraw up to 25% of the total accumulated corpus. The partial withdrawal option is only available after the expiry of 10 years from the date of opening your NPS account.
How to Withdraw Funds From Your NPS Account Online?
The PFRDA has empowered three Central Record Keeping Agencies (CRAs) to open and manage NPS accounts. The process to withdraw funds from your NPS account is largely similar across CRAs. Here’s an overview of the steps that you need to follow.
Step 1: Visit the NPS account portal of your CRA.
Step 2: Log into your account using the user ID and password provided at the time of registration.
Step 3: Initiate an online withdrawal request.
Step 4: Enter all of the details, such as the percentage of corpus you wish to withdraw as a lump sum amount and the percentage of corpus you wish to invest in an annuity plan, among others.
Step 5: Upload all KYC documents like proof of identity, proof of address, and bank account proof in the portal.
Step 6: Enter the OTP sent to your registered mobile number to authenticate the withdrawal request.
Step 7: Upon successful authentication, sign the system-generated withdrawal form through the Aadhaar eSign protocol.
Step 8: Once the Aadhaar eSign is complete, your withdrawal request will be submitted to the concerned Point of Presence (POP) bank.
The bank will verify your withdrawal request along with the uploaded KYC documents. Once the verification is complete, the lump sum amount that you chose to withdraw will be deposited in your bank account.
Note: The withdrawal process explained above is only applicable to Tier-I NPS accounts. To withdraw funds from Tier-II NPS accounts, you need to fill out and submit form UOS-S12 to the concerned POP bank.
The National Pension System is one of the best pension plan in India with a transparent and well-regulated scheme to help you financially secure your post-retirement future.
Consider life insurance in addition to NPS for enhanced family financial protection. It offers maturity and death benefits, providing a lump sum payout.
Annuity Service Providers:
PFRDA is a statutory body set up by the Government of India to regulate and develop the pension sector in India. An annuity pension is a type of pension in which the pensioner receives a fixed monthly income as per terms and condition of the plan
The relationship between PFRDA and ASPs (Annuity Service Providers) is that PFRDA is the regulator of the National Pension System (NPS), and ASPs are the entities that provide annuity services to NPS subscribers. When an NPS subscriber reaches the age of 60, they are required to annuitize at least 40% of their pension wealth. They can do this by purchasing an annuity from an ASP that is empanelled by PFRDA
You can select any of the annuity schemes offered by Annuity Service Providers (ASPs) registered with IRDAI and empaneled with PFRDA. HDFC Life is one of the registered ASPs for annuity issuance and further servicing.
- National Pension System (NPS): A Detailed Guide
- NPS or EPF or both: What should I opt?
- Types of Pension Plans and Their Tax Benefits
- Pension Fund Investment - Meaning and Types
- Tax Benefits - How NPS Helps You Save Income Tax?
- Growing Together, Saving Together: Financial Tips for Married Couples
ARN - INT/ED/10/23/5113
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