NPS Withdrawal Rules: How to Check Annuity Preference, Eligibility, Claims & Unique Withdrawal Options?

Last Updated : March 28, 2023, 12:03 p.m.

The National Pension Scheme is a voluntary retirement scheme that falls under the Pension Fund Regulatory and Development Authority’s jurisdiction and the Indian Government. The NPS withdrawal corpus is feasible as a lump sum or annuity, preference, and eligibility after retirement. NPS withdrawal is possible prematurely or after maturity with distinct applicable rules for distinctive kinds of withdrawals. You can access the NPS withdrawal form on the official website of CRA-NSDL.

What are the National Pension Scheme Withdrawal Rules?

If you are a National Pension Scheme subscriber, you can withdraw your National Pension Scheme corpus, both maturely and prematurely, subject to standing up to multiple aspects. Moreover, you can make a partial NPS withdrawal in case of any emergency. There are reciprocal withdrawal restrictions based on the corpus, age, and other aspects.

Different Kinds of National Pension Scheme Withdrawal Forms

Based on the kinds of withdrawal, the different kinds of NPS withdrawal forms available are as follows:

• Partial Withdrawal
• Premature Withdrawal
• Superannuation Withdrawal
• Death

Process and Paperwork for National Pension Scheme Withdrawal

You are required to submit an NPS withdrawal form to your respective Presence Point together with the documents mentioned below:

• Original Permanent Retirement Account Number
• Proof of Identity like Passport, Permanent Account Number Card, Driving License, etc
• Proof of Residence Address like Aadhaar Card, Voter Identification Card, Passport, etc
• Certificate from banks or cancelled cheques containing your name, bank account number, and IFSC code
• After verifying your documents, the Point of Presence will give your documents to CRA-NSDL.

National Pension Scheme Rules in Case of Partial Withdrawal

New regulations are waiting to be implemented for partial National Pension Scheme withdrawal. If you require cash, you can partially withdraw some tax-free amount from your investment. You can apply online or submit an NPS withdrawal form to your Point of Presence service provider. Nonetheless, it comes with a few strict rules. A few regulations under which you can apply for partially withdrawing from your National Pension Scheme are as follows:

• Becoming a National Pension Scheme subscriber for approximately three years would be best.
• The withdrawal amount can not go beyond 25% of your overall investment at that particular time.
• You can apply for a partial NPS withdrawal under a few conditions, such as higher education, marriage, medical conditions, accidents, illnesses, investing in a residential property, etc.

Things To Remember Before Applying For NPS Withdrawal Claims

Before applying for National Pension Scheme withdrawal claims, it would be best to remember the things mentioned below:

• You can apply for a withdrawal claim at the modal office of the CRA or the NPST.
• When you apply for a withdrawal claim for constructing your home, you are required to submit proof that you are the owner of the property or a joint owner. Your application for withdrawal claims will only be accepted if you do not own any other property besides your ancestral property.
• Your family member can file a withdrawal claim if you suffer from a medical illness.
• During the overall duration of the National Pension Scheme, you can make only three withdrawals.
• According to your status and employment mode, you require an NPS withdrawal form.
• Separate withdrawal forms are available for corporates and government employees.

National Pension Scheme Withdrawal Rules

The NPS withdrawal rules are as follows:

Government Sector Subscribers

• Until you attain the age of seventy years, the lump sum withdrawal can be delayed.
• You can invest a minimum amount of forty percent in an annuity, with the choice to withdraw the minimum invested amount in a lump sum. You can use a National Pension Scheme to determine your scheme amount.
• In case your pension amount is below five lakhs Indian rupees, you can opt to withdraw the overall amount.

Voluntary Retirement of Government Employed Subscribers

• You can invest a minimum amount of eighty percent in an annuity.
• If the pension amount is below Rs.2.5 lacs, you can opt to withdraw the overall amount.
• You can get a balance cumulative of the National Pension Scheme.

Death of a Government-Employed Subscriber

• If a subscriber employed in the government sector passes away before retirement, the nominee or legal heir will receive the total National Pension Scheme amount.

Individuals Employed in the Corporate Sector Retirement

• You can invest a minimum amount of forty percent in an annuity, and you can opt to withdraw the amount in a lump sum.
• Until you attain the age of seventy years, the withdrawal of the lump sum amount can be delayed.
• If the accumulated pension amount is below or equivalent to five lakh Indian rupees, you can opt to withdraw the total amount.

Individuals Employed in the Corporate Sector on Voluntary Retirement

• It will be helpful if you maintain an account for approximately ten years.
• You can use eighty percent of your amount to invest in an annuity.
• If your accumulated pension amount is below or equivalent to Rs.2.5 lacs, you can opt to withdraw the total amount.

Death of an Individual Employed in the Corporate Sector

• Suppose an individual employed in the corporate sector passes away. In that case, the nominee can opt to withdraw the cumulative pension amount as a lump sum amount and take advantage of the National Pension Scheme death privileges.

Rules for Partially Withdrawing National Pension Scheme Amount

The NPS withdrawal rules in the case of partial withdrawals are as follows:

• You can withdraw three times during the entire term of your duration.
• You can withdraw approximately 25%  of your contribution towards the National Pension Scheme amount.
• It would be best to be a member of the National Pension Scheme amount for approximately three years to apply for partial withdrawals.

Conclusion

Even though the National Pension Scheme is a long-term investment scheme for retirement planning, it gives some adjustability for partial and premature National Pension Scheme withdrawals under certain situations. When the scheme matures, you have multiple options pertaining to NPS withdrawal under specific regulations. When you have invested in the National Pension Scheme through the online method or via a broker, an understanding of numerous NPS withdrawal options is necessary. It will aid you in managing the investment properly.