New NPS partial withdrawal: Everything you need to know about pension rule

The Pension Fund Regulatory and Development Authority permits subscribers to make partial withdrawals from their saved pension money in the National Pension System for specific purposes

Subscribers are permitted to make specific partial withdrawals from their National Pension System (NPS) by the Pension Fund Regulatory and Development Authority (PFRDA).

The PFRDA circular dated January 12, 2024, states that subscribers can create partial withdrawals for motives, for example, advanced education, marriage, private house purchase, and medical expenses.

As per the circular issued by the authority dated January 12, 2024, "This Master Circular shall take effect from 01 February 2024 but shall be without prejudice to their (earlier issued circulars) operation and effect, for the period when they were in force, until them being subsumed under the Master Circular." 

NPS Partial withdrawals purposes

-Treatment of illnesses, including hospitalisation and treatment expenses for diseases like cancer, kidney failure (End Stage Renal Failure), coronary artery bypass graft, aorta graft surgery, heart valve surgery, stroke, primary pulmonary arterial hypertension, multiple sclerosis, major organ transplant, myocardial infarction, coma, total blindness, paralysis, accidents of serious/life-threatening nature and Covid-19. 

-Purchase or development of home or flat in the subscriber's name or in joint name with their legally married partner. But, if the subscriber already possesses a residential house or flat (apart from ancestral property), no withdrawal will be allowed.

-For higher education for the subscriber's children, including an adopted child

-Costs brought about by the subscriber for the foundation of her/his own venture or any new companies.

-Marriage of the subscriber's children, including a legitimately adopted child.

-Medical and accidental costs emerging from the disability or incapacitation endured by the subscriber.

-Expenses incurred by the subscriber for self-development activities like skill development/re-skilling. 

Limit, Eligibility Criteria, and Frequency for Availing Partial Withdrawal of NPS

    • The partial withdrawal sum shouldn't exceed 25 percent of the subscriber's overall contributions in their single pension account, barring the Page 5 of 6 employer's contribution, as of the application's date for withdrawal. The contributions' earned returns cannot be withdrawn.       

    • The subscriber must have been a National Pension System member for at least three years since joining.      

    • The National Pension System only allows subscribers to make a maximum of three partial withdrawals over the course of their subscription. Only incremental contributions made by the subscriber from the date of the previous partial withdrawal will be accepted for subsequent partial withdrawals.

NPS: Withdrawal Request Submission

The subscriber must submit the withdrawal request alongside a self-declaration expressing the purpose for the withdrawal to the central record keeping agency as the case may be via their individual Government Nodal Office or Point of Presence.

For the situation where a subscriber is experiencing any disease determined in para 6(d) of this master circular, the withdrawal request might be put together by any family member of such subscriber.

Processing and Verification of NPS 

Upon receiving the withdrawal request, the Point of Presence or Government Nodal Office, as the case may be, must identify the beneficiary.

CRA will only process partial withdrawal requests after the subscriber's bank account has been successfully verified through "Instant Bank Account Verification" using techniques like penny drops or any other recent technology upgrade.