Tuesday, January 21, 2014

PRFDA 25% CPS Withdrawals by NPS Subscribers Guidelines

PRFDA 25% CPS Withdrawals by NPS Subscribers Guidelines. PRFDA Guidelines for 25% CPS Withdrawals by NPS (Non Pension Scheme Subscribers)
Guidelines for Withdrawal of 25 % of Accumulated  Contributions by NPS Subscribers
Pension Fund Regulatory And Development Authority
As per Chapter VI, Sec 20 (2b) of the PFRDA act, 2013 it has been provided that withdrawals, not exceeding twenty-five percent (25%) of the contribution made by the subscriber, may be permitted from the individual pension account subject to the conditions, such as purpose, frequency and limits as may be specified by the regulations. In order to finalise the regulations for withdrawals, it becomes imperative to develop the formal aspects of the permitted withdrawals allowed under the Act for the benefit of NPS subscribers.
EXISTING EXIT / WITHDRAWAL GUIDELINES UNDER NATIONAL PENSION SYSTEM (NPS)
The current exit / withdrawal guidelines under NPS are framed in such a manner that the subscriber has a long period of accumulation of corpus for providing him with a decent accumulated pension wealth when he retires or he moves out of the regular work routine due to age. Also, it lets the subscriber have the freedom to move out of the scheme at any point of time, irrespective of cause or reason which determines the
complete exit from the scheme.
The following are the current rules/guidelines for withdrawals under NPS as approved by PFRDA:
a) Exit from NPS upon attaining the age of Normal superannuation (for govt. employees only) or upon attaining the age of 60 years (for all subscribers other than govt. employees): At least 40% of the accumulated pension wealth of the subscriber needs to be mandatorily utilized for purchase of an annuity providing for the monthly pension of the subscriber and the balance is paid as a lump sum payment to the subscriber.
b) Exit from NPS before attaining the age of Normal superannuation (for govt. employees only) or before attaining the age of 60 years (for all subscribers other than govt. employees): At least 80% of the accumulated pension wealth of the subscriber needs to be utilized for purchase of an annuity providing for the
monthly pension of the subscriber and the balance is paid as a lump sum payment to the subscriber.
c) Upon Death: The entire accumulated pension wealth (100%) would be paid to the nominee / legal heir of the subscriber.
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