NPS: Up to 25% of corpus allowed for partial withdrawal; here’s when you are permitted to withdraw

Pension fund body PFRDA (Pension Fund Regulatory and Development Authority) has released a new circular stipulating the provisions of withdrawal of pension under the National Pension System (NPS). These provisions will come into effect from Feb 1, 2024.

The latest rules suggest that subscribers are permitted to withdraw not over twenty five percent of their contributions to their individual pension account excluding the employer’s contribution.

Partial withdrawals permitted for these purposes:

1. Higher education of the subscriber’s children including a legally adopted child.

2. Marriage of subscriber’s children, including a legally adopted child. 

3. Purchase or construction of a residential house or flat in the subscriber's own name or in joint name. 

It is vital to note that no  withdrawal is permitted when the subscriber already owns a house.

4. Treatment of specified illnesses including hospitalisation and treatment expenses for diseases such as cancer, kidney failure, primary pulmonary arterial hypertension, multiple sclerosis, major organ transplant, coronary artery bypass graft, and others. 

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5. Medical and incidental expenses arising from the disability or incapacitation suffered by the subscriber.

6. Expenses incurred for skill development/ re-skilling 

7. Expenses incurred by the subscriber for the establishment of  his/her own venture or any start-up.

Prerequisites for partial withdrawals:

1. The NPS subscriber should have been a member of the NPS for a minimum of three years from the date of joining.

2. The partial withdrawal amount should not be more than one-fourth of the subscriber's total contributions in their individual pension account.

3. Subscriber is allowed to make a maximum of three partial withdrawals during their entire subscription tenure under the NPS. 

How to process request?

In order to process withdrawal request, subscriber should submit the withdrawal request along with a self-declaration stating the purpose for the withdrawal to the central recordkeeping agency (CRA) through their respective government nodal office or point of presence.  

Partial withdrawal requests will be processed by CRA only post successful verification of the subscriber's bank account through instant bank account verification using methods such as penny drop.