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New Delhi: There is news of great relief for those who invest in the National Pension System (NPS). PFRDA has notified changes in the rules related to exit from NPS. Under the new rules, non-government investors will now have to pay less money to buy annuities. This will allow you to get more money in hand at the time of retirement. The purpose of the rules is to give investors more flexibility. Especially those who have been investing in NPS for a long time will benefit.
According to the new rules, non-government NPS investors will now have to invest only 20 percent of the total deposit amount in annuity. Earlier this limit was 40 percent. This facility will be available to those who have completed at least 15 years in NPS. Apart from this, this rule will also be applicable on completing 60 years of age or retiring from a job. The investor can withdraw the remaining 80 percent of the amount in lump sum or in installments. This will make retirement planning easier.
If the total pension amount deposited by an investor is Rs 8 lakh or less, then he will not need to buy an annuity. In such a situation, the entire amount can be withdrawn simultaneously or in installments. If the total amount is more than Rs 8 lakh and less than Rs 12 lakh, then the option of lump sum withdrawal of up to Rs 6 lakh will be available. The remaining amount can be taken as a regular payment. This rule is considered a big relief for small investors.
Strict rules have been kept for investors who want to exit NPS before the stipulated time. 80 percent of the amount will have to be invested in annuity before completing 15 years or before 60 years of age. However, if the total deposit amount is Rs 5 lakh or less, then the entire amount can be withdrawn. The government's objective is to promote long-term savings.
The new rules allow investors to defer buying annuities and withdrawing funds till the age of 85 years. For this, an application must be submitted to the NPS Trust or an authorised institution. Rules have been clarified for those who join NPS after 60 years. At the same time, government employees will be allowed to remain in NPS for 85 years even after retirement. However, they will have to invest 40 percent of the amount in annuity at the time of their exit.
