The government has made major changes in the rules of the National Pension System. Now investors investing in this scheme can withdraw up to 80 percent of the money in lump sum. The special thing is that the government has reduced the annuity limit from 40 percent to 20 percent. Under this, investors can now withdraw up to 80 percent of their deposits in lump sum. 20 percent will be given as pension. Notification has been issued by the government.
If we try to understand the new rules in simple language, if the total deposit amount i.e. APW of an investor is up to Rs 10 lakh, then he can withdraw 100 percent of the amount in lump sum and it will not be mandatory for him to take Annuity. At the same time, if the APW is more than Rs 10 lakh, the investor will be able to withdraw a maximum of 80 percent in lump sum. 20 percent of the money will have to be invested in annuity.
To whom will this rule apply?
According to the government notification, this change will be applicable to NPS account holders of both government and private sectors. Lump sum and annuity options have been made quite easy in conditions like voluntary withdrawal, retirement, exit after 60 years and death. According to the government, the objective of these changes in rules is to provide better flexibility to investors and meet their money needs after retirement. According to experts, due to reduction in the annuity limit, NPS has now become a better investment option. This scheme will now attract more people who want to keep as much money as possible in their hands after retirement. With this, retirement planning will also be much easier.
What is 20 percent annuity rule?
According to the new rules issued by the government, the total accumulated pension corpus of private sector NPS members will exceed the prescribed limit. Now they will have to invest at least 20 percent of the amount in annuity. Members will get regular pension from this annuity. The remaining 80 percent money can be withdrawn in lump sum. However, it can be withdrawn gradually through options like Systematic Unit Withdrawal (SUR). This rule will be applicable at the time of normal retirement at the age of 60 years, on completion of minimum subscription period and in case of exit between 60 and 85 years.