In contrast to the EPF account, corpus accumulated in the NPS account can only be withdrawn on the attainment of superannuation (in case of government employees) or on reaching the age of 60 years (in case of other private-sector salaried employees). Also, on meeting this criteria, an NPS subscriber is required to purchase an annuity with 40% of the total corpus.
In the other case when a subscriber wishes to exit investment in the scheme at an earlier date, an annuity with an amount not less than 80% of the total corpus is required to be purchased and the balance amount as lump sum payment shall be given to the subscriber.
The proposal follows immense pressure for allowing flexibility in the NPS scheme. However, with specified terms and conditions, the provisions of the proposal will ensure that subscribers do not exit the scheme as a whole.
In respect of the amount that can be withdrawn, PFRDA through its circular dated January 15, has proposed withdrawals of not over 25% of the contribution made by the subscriber after completion of 10 years in the scheme. It must be noted that withdrawals shall be allowed only on the subscription amount and the corpus amount as a whole shall not be allowed for withdrawal. As, the scheme shall have accumulated a substantial corpus after 10 years term, withdrawal is proposed to be allowed for following purposes that include medical treatment for self, spouse or children for some particular illness, marriage or education of children or residential property purchase.
Withdrawal for the above listed purposes can be made thrice through the term of the NPS account. And, a minimum of 5 years of gap has to be maintained after each withdrawal with an exception in case the funds are needed for medical treatment.
In respect of the proposed provisions, the PFRDA has invited suggestions/feedback till January 31. After that the final guidelines that shall be binding on all stakeholders concerned shall be announced by the regulatory body.