New NPS Rules Coming into Effect on February 1

Under the new NPS rules effective from February 1, subscribers are limited to withdrawing a maximum of 25% from their pension accounts, excluding the employer's contribution. The updated regulations by PFRDA outline specific purposes for partial withdrawals, including higher education expenses, marriage costs for the subscriber's children, residential property purchase or construction, medical expenses for specified illnesses, disability-related expenses, skill development, and entrepreneurial ventures.

Conditions for partial withdrawals:

To be eligible for partial withdrawals from the NPS, subscribers must have been members for a minimum of three years from the date of joining.

The withdrawal amount is restricted to a maximum of one-fourth of the total contributions in the subscriber's pension account.

Throughout their subscription period under the NPS, subscribers are permitted a maximum of three partial withdrawals.

For subsequent withdrawals, only the incremental contributions made by the subscriber since the last partial withdrawal date will be allowed.

How to request withdrawals?

To request a withdrawal, subscribers need to submit their request and a self-declaration explaining the purpose of the withdrawal to the central recordkeeping agency (CRA) through their government nodal office or point of presence.

If a subscriber is unwell and unable to request a withdrawal, a family member can submit the request on their behalf. Upon receiving the request, the Point of Presence or Government Nodal Office will verify the recipient.

CRAs will process partial withdrawal requests only after successfully verifying the subscriber's bank account. This verification is done through methods like penny drop.

In the penny drop verification, CRAs perform a 'test transaction' by depositing a small amount into the subscriber's account and checking if the name matches. In simple terms, the bank account must pass this 'penny drop' check for any withdrawal request to be approved or for changes to the account details.

Also Read: GSTN Issues Advisory Regarding Submission of Bank Account Details Under Rule 10A

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