New Delhi: In order to protect the interest of its subscribers, the PFRDA (Pension Fund Regulatory and Development Authority) proposes amendments to the Pension Fund Regulatory and Development Authority (Exits and withdrawals under the National Pension System) regulations 2015.
The PFRDA is planning these upgrades for how people can exit and withdraw money from the National Pension System (NPS). The aim is to give subscribers (NPS account holders) more flexibility, easier processes, and more choices in managing their pension money at different stages of life.
The proposed changes are:
- The proposed changes include a clearer definition of “exit”: the meaning of “exit” will be broadened to cover new schemes like NPS Vatsalya (for children/parents) and other non-government sector schemes.
- Exit rules for non-government schemes: For subscribers of private sector, new rules will be added in NPS plans
- Higher entry and exit age: People will be allowed to join NPS or continue it for a longer period (higher age limit).
- No advance notice needed: If the subscribers want to delay taking their pension lump sum or annuity, then there is no need for them to inform them in advance.
- More money allowed as a lump sum: The maximum limit for taking savings in one go (instead of buying an annuity) will be increased if the pension wealth is below a certain level.
- Systematic withdrawals option: If the amount of pension is small, one could withdraw it gradually instead of all at once. It will be like a SIP in reverse.
- Bigger lump sum at retirement (private sector): Private sector employees can take out a larger share of their savings in cash at retirement.
- No waiting period for 60-plus joiners: If one wants to join NPS after the age of 60, they won’t have to wait for a vesting period before making a normal exit.
- Loans against NPS: Loans may be allowed to borrow money from banks/financial institutions using pension accounts.
- Partial withdrawals revised: Rules for partial withdrawals will be relaxed. The conditions are related to how much, how often, and for what reasons the subscriber wants to withdraw the amount. Also, people can withdraw even after 60 years/retirement if needed.
- Exit if citizenship is renounced: Rules will be set for what happens to the NPS money if one give up their Indian citizenship.
- Exit under NPS Vatsalya: Specific exit rules will be made for this new product.