The Pension Fund Regulatory and Development Authority (PFRDA) has proposed allowing subscribers of National Pension System (NPS) to withdraw up to 25 per cent of accumulated funds. The PFRDA has now sought public comments on draft guidelines till February 15.
As per the proposal guidelines, the withdrawal amount will be treated as partial withdrawal and will use for meeting medical treatment expenses, higher education of children, marriage of daughters and house purchase. However, partial withdrawal is allowed only after 10 years of contribution by the subscriber. Furthermore, the subscriber cannot withdraw more than 25 per cent of the contribution made by them. Presently, partial withdrawals are not permitted and NPS subscriber had to completely exit the scheme for withdrawal before maturity. Referring to frequency of withdrawal, the proposal noted that the subscriber will be allowed to withdraw for maximum 3 times and there should be a gap of at least 5 years between two withdrawals.
The National Pension System (NPS) is a defined contribution based pension system launched by Government of India (GoI) with effect from 1 January 2004. The scheme is a long-term, retirement savings product that accumulates and generates maximum pension wealth. NPS is mandatory for all government employees who joined services after April, 2004 and is also open to private sector.