National pension scheme NPS Withdrawal Rules and Regulations

The National Pension Scheme was a instrumental structure introduced by the Indian government to provide pension plan to people of India under parliamentary act of 2013. This scheme is directly controlled by the Pension fund regulatory and development authority.

The NPS is open to all the person who voluntarily want to invest in pension scheme, provided the age is between 18 – 60 years. The minimum investment limit set up by government of India under this scheme is Rs 500 per month or Rs 1000 per annum, however there is no upper limit to this scheme laid down by the government of India. Further this scheme provides a tax rebate of maximum Rs 50,000 under this scheme according to income tax act 80CCD (1B).

This is a national scheme introduced by the government for the people who looks forward to invest in a retirement plan. According to this scheme the money invested will be further vested in debt or equity market as per the preference of the policy holder. After retirement the policy holder can withdraw 60% of the money and the rest 40% will be invested to purchase annuity. However the matured 60% of the amount is not exempted from tax. The new pension scheme or national pension scheme provides a huge range of choices of investments to select from.

Investments made by a policy holder towards national pension scheme has to be withdrawn at some point of time or the other, the withdrawal facility that is provided by the national pension scheme reads below :

Highlights of withdrawal from the National Pension scheme

Since the investment period of the National pension scheme is from 18 – 60 it never means that the withdrawal from the same is possible only after the maximum age limit has been crossed, any one can withdraw from their NPS account as and when required by them, but the same is controlled by some terms and conditions as per the withdrawal time frame.

Withdrawal below the age of 60 or premature withdrawal is possible for NPS, only if the policy holder invest 80% of the wealth in the pension account to buy a life annuity from any financial institution under the Insurance regulatory development authority, then only the policy holder will be able to withdraw the remaining 20% of the amount from their National pension scheme account before the age of 60.

Withdrawl at the age of 60 or beyond upto 70 year states that the policy holder must invest 40% of the wealth in the pension account to buy a life annuity from any financial institution under the Insurance regulatory development authority.

Further on attaining the age of 60 or the exit age, national pension scheme also provides the policy holder the flexibility of investing more than 40% in the annuity and the rest of the money beyond 40% of invested amount or the percent amount that the policy holder wishes to invest in annuity can be withdrawn in a lump sum manner or phased manner till the age of 70 , as per the wish of the NPS account holder.

In case of phased manner of withdrawal a policy holder must encash a minimum of 10% of the total money left after investment, every year. Any amount still lying in the policy holders pension account after investment in annuity and phase withdrawal till 70, must be with drawn by the policy holder in a lump sum manner.

In case of death of the policy holder the nominee is availed to the option of withdrawing the entire amount in the subscribers pension account on a lump sum mode.

For the withdrawal of the money from the National pension scheme account the following are the forms required :

The mentioned forms are available on www.npscra.nsdl.co.in

Further policy holders can get hold of the forms in their email by sending mail across to the following email id’s : npsclaimassist@nsdl.co.in and info.cra@nsdl.co.in

Documents that needed to be submit at the time of Withdrawl

At 60 years of age and before 60 year of age ( Superannuation & Premature )

Covering Letter from the associated POP/POP-SP to be submitted along with the Withdrawal form

Advanced stamped receipt needs to be duly filled and cross-signed on the Revenue stamp by the subscriber

Original PRAN card or affidavit stating the reason for non-submission of PRAN card in case of Non submission of PRAN card

KYC documents (address and photo-id proof) attested by mapped POP/POP-SP

Cancelled Cheque having subscriber’s Name, Bank Account Number and IFS Code or ‘Bank Certificate’ on Bank Letterhead having subscriber’s name, Bank Account Number and IFS Code required to be submitted as bank proof. ‘Copy of Bank Passbook’ can be accepted, however, it should have subscriber’s photograph on it and should be self attested by the subscriber

Document required for withdrawal in case of death of the National pension scheme account holder.

Covering Letter from the associated POP/POP-SP to be submitted along with the Withdrawal form

Advanced stamped receipt needs to be duly filled and cross-signed on the Revenue stamp by the subscriber

Original PRAN card or affidavit stating the reason for non-submission of PRAN card in case of Non submission of PRAN card

Cancelled Cheque having subscriber’s Name, Bank Account Number and IFS Code or ‘Bank Certificate’ on Bank Letterhead having claimant’s name, Bank Account Number and IFS Code required to be submitted as bank proof. ‘Copy of Bank Passbook’ can be accepted, however, it should have claimant’s photograph on it and should be self attested by the claimant

Original Death Certificate issued by the Local Authority

In case the Nominee details are not available in the CRA system, a legal heir certificate OR a certified copy of family member’s certificate issued by Executive Magistrate is required indicating the relationship of the claimant with the deceased as well as supporting documents is to be provided. If all the legal heirs are not claiming the pension funds, Relinquishment deed to be submitted from all the legal heirs (except the Claimant) on a Stamp paper of Rs. 100/-along with the KYC documents (Photo ID proof and Address proof) of all the legal heirs duly attested by the mapped POP/POP-SP. Also an Indemnity bond needs to be obtained from the claimant stating the responsibility for claiming on behalf of all the legal heirs

POP/POP-SP has to submit the Death IRA compliance certificate if the subscriber’s PRAN is Non-IRA compliant

Further the following are the tax benefit available to the National pension scheme account holder during with drawl.

Final payout under this scheme can be taken out in 2 ways 33% of the corpus can be withdrawn as a lumpsum amount and the same is non taxable, however the rest of the amount is taxable. Upto Rs. 50000 is non taxable under section 80CCD(1B) of IT act and above Rs 1.5 lakh tax exemption is provided under section 80C of the Act. The tax benefit is applicable to both salaried and non salaried individual.

So we can see it is not complicated at all to withdraw from a National pension scheme account, hence opting for one to have a secure future is always the best deal.

To Apply for NPS account submit details 

or Call us at 011-42445800 / 9650901058