Monday, December 28, 2015

NPS Premature Withdrawal Rules – Tier I & II

 

National Pension Scheme (NPS) Premature Withdrawal Rules

The recommendations of a house panel on the new pension scheme aims at making NPS investor friendly. It intends to help private workers in building a corpus of funds for retirement with reasonable returns.

Here are the basic rules for NPS premature withdrawal:

1) Upto 25% of the contribution to be allowed for partial withdrawal

2) Investors to be allowed three such withdrawals

3) Another important rules for NPS withdrawal is that the minimum contribution of 10 years is needed to be eligible for withdrawal facility

4) Gap of 5 years between withdrawals but not in case of critical illnesses

 

5) Withdrawal to be allowed for treatment of serious illnesses for the person investing in NPS, spouse and children

6) NPS withdrawals can also be made for higher education of children's and their marriage

7) For buying and constructing your first house, you can withdraw money from national pension scheme account

Withdrawal Conditions Under Tier – I & II Account

Although there are multiple options through which you can open an NPS account. The two most important ones are Tier – I & II. Following are the NPS withdrawal rules for these two accounts:

1) Tier-I Withdrawal: Prior to 2011, the lock-in period was till the age of 60. But after reviewing the pension fund regulatory and development authority bill, the committee agreed on enabling subscribers for premature withdrawals in the form of repayable advance but only under the condition that – the investor completes 15 years of service. Investor can also withdraw up to 50% of contribution after he/she serves minimum 25 years of service. Withdrawals can be done when faced with unforeseen life events such as critical illnesses and emergencies.

2) Tier-II Withdrawal:  Unlimited withdrawals are permissible for an investor who invests in Tier-II account which acts like a normal savings bank account. However the process of withdrawing the money is tiresome. The agencies (called POP – Points of Presence) through which the requests is to be made are very less in numbers and everything is to be done offline resulting in investors to travel longer distances.

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