The Pension Fund Regulatory and Development Authority (PFRDA) on Tuesday announced several changes to the National Pension System (NPS), providing greater flexibility for corporate sector subscribers with respect to withdrawals.

The new rules specify that non-government subscribers are now allowed to withdraw up to 80% of their corpus exceeding ₹12 lakh at the time of retirement, while the remaining 20% will be disbursed as annuity.

However, government employees will continue to withdraw only up to 60%, with the balance to be withdrawn as an annuity. Prior to this rule, both government and non-government subscribers were permitted to withdraw 60%, and 40% earmarked for annuity.

Less than ₹8 lakh

Non-government subscribers who have completed 15 years of contributions or have attained 60 years of age or superannuated can withdraw the entire corpus if it is ₹8 lakh or less, reads the notification.

Above ₹12 lakh

If the accumulated amount is between ₹8 lakh and ₹12 lakh, up to ₹6 lakh can be withdrawn, with the remainder used for annuity. If the corpus exceeds ₹12 lakh, subscribers can opt for an 80:20 lump sum annuity split, instead of 60:40, which has existed to date.

Additionally, now subscribers can stay invested until the age of 85, unless they choose to exit earlier.

A normal exit is allowed post 15 years of subscription or after attaining 60 years, superannuation or retirement, whichever is earlier. In the event of a subscriber’s death before annuity purchase or lump sum withdrawal, the accumulated corpus will be paid to the nominee or legal heir.

If a subscriber is missing and presumed dead, 20% of the corpus will be paid as interim relief, with the balance released after formal determination under the Bharatiya Sakshya Adhiniyam, 2023.

Corpus withdrawal: Key changes

>> Lower than ₹8 lakh: When the corpus is lower than ₹8 lakh – say ₹7.5 lakh, non-government subscribers can withdraw the entire sum.

>> Lower than ₹12 lakh: When the amount is ₹8-12 lakh, up to ₹6 lakh can be withdrawn, and the balance is used to purchase annuities.

>> Above ₹12 lakh: When the corpus is above ₹12 lakh, subscribers can withdraw up to 80% of the corpus. For instance, when the corpus is ₹15 lakh, one can withdraw ₹12 lakh (i.e. 80%) and the remaining ₹3 lakh to be given as annuities. Earlier, they could withdraw only up to ₹9 lakh.

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