Any central employee can partially withdraw or exit from New Pension Scheme at the time of retirement as per eligibility and requirement.
As you know that partially withdrawing or exiting from NPS is completely different from old pension scheme. The rules for partially withdrawing from gpf in old pension scheme are a bit flexible, whereas many restrictions have been imposed in new pension scheme.
In this article, we are going to tell you that what are the restrictions for a central employee to partially withdraw from NPS and under what conditions he is eligible to exit from NPS.
Also read- Important NPS Tax Benefits for Government Employees NPS Structure for Government Employees Things to keep in mind while filling PRAN Application Form
Partial Withdrawal from NPS
A central Government Employee can withdraw partially from his New Pension Scheme Account under some conditions.
Following are the conditions of Partial Withdrawal from NPS-
- Government employee should be in New Pension Scheme system for 3 years.
- He can withdraw maximum 25% of the total contribution made by him in New Pension Scheme at the time of withdrawal.
- He can withdraw from NPS only for the following specified reasons-
i) Higher education of children.
ii) Marriage of children.
iii) For the purchase /construction of residential house or flat in his or her own name or in a joint name with his or her legally wedded spouse. In case the Subscriber already owns either individually or in the joint name a residential house or flat, other than ancestral property, no withdrawal under these regulations shall be permitted.
iv) For treatment of specified illnesses- suffered by Subscriber his legally wedded spouse, children including a legally adopted child and dependent parents. - A Government employee can withdraw to a maximum of three times during his entire tenure of subscription.
- Ease of Partial withdrawal of NPS subscribers through self-declaration- The subscribers shall be allowed partial withdrawal based on self-declaration and thereby doing away with the Submission of supporting documents to substantiate the reasons for partial withdrawal, subject to fulfilment of all other process as per OM, dated 14-1-2021
Exit from New Pension Scheme
A Central Government Employee can withdraw or Exit from New Pension Scheme under the Regulations, 2015 of PFRDA (Pension Fund Regulatory and Development Authority). These regulations are as follows-
On retirement or Normal Superannuation
When a Central employee retires after completing his service, he has to utilize at least 40% of the total accumulated amount in his nps account for the purchase of an annuity. Central Government provides monthly pension to that employee from the benefit of this annuity.
The balance amount i.e. 60% of his total accumulated amount is paid as lumpsum to the government employee.
But the total accumulated amount in his NPS account is less than or equal to 2 lakh as on the Date of Retirement then he can avail the option of complete withdrawal.
Upon Death
When a Government servant dies during the service period, then at least 80% of the accumulated amount in his NPS account is utilized for purchase of an Annuity. Central Government provides monthly salary to the spouse of that government employee by this annuity.
The balance amount in his NPS account is paid as lumpsum to the nominee or legal heir.
In case the total corpus in the account is less than or equal to 2 lakhs as on the Date of Death of the Subscriber, nominee / legal heir can avail the option of complete withdrawal.
Further, if family member opts for family pension, as per the Regulations, all the accumulated pension wealth shall be transferred to the bank account of the Nodal Office for further settlement as per Government directives.
Premature Exit
At least 80% of the accumulated pension wealth of the Subscriber has to be utilized for purchase of an Annuity presiding the monthly pension to the Subscriber and the balance is paid as a lumpsum to the Subscriber.
In case the total corpus in the account is less than or equal to 1 lakh as on the Date of Resignation, the Subscriber can avail the option of complete withdrawal.
Permission of partial withdrawals towards treatment of specified illnesses-COVID-19 as a pandemic
As “COVID-19” has been declared as a critical illness which is life-threatening in nature
(a) The partial withdrawals shall be permitted to fulfil financial needs of the subscribers, if required to him/her against the request placed for partial withdrawals towards treatment of illness of subscriber, his legally wedded spouse, children, including a legally adopted child or dependent parents as mentioned in Regulation 8 (1)(A) (d) of the said regulations.
(b) The other terms and conditions as prescribed under Regulation 8 of the PFRDA (Exits and Withdrawals under NPS) Regulations, 2015 and amendments thereto shall continue to be applicable regarding defining of limits and frequencies.
(c) Documentation
The Nodal Office/PoPs/Aggregators would ensure that the subscriber has provided the following documents before authorizing partial withdrawals- Medical Certificate, Formal request for partial withdrawal.
