New provisions for partial pension withdrawal: All you need to know

The PFRDA introduced rules for partial withdrawals from National Pension System, allowing subscribers to withdraw up to 25% for specified purposes, effective from February 1

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The Pension Fund Regulatory and Development Authority (PFRDA) has notified new provisions for the withdrawal of pension under the National Pension System (NPS), which is set to take effect from February 1, 2024. These rules, released by the Ministry of Finance on Wednesday, grant subscribers the option to withdraw a maximum of 25 per cent of their contributions to their individual pension account, excluding the employer's contribution.

Partial pension withdrawal: Reasons

1. Higher education of the subscriber's children, including a legally adopted child.

2. Marriage of the subscriber's children, including a legally adopted child.

3. Purchase or construction of a residential house or flat in the subscriber's own name or jointly. (Note: No withdrawal is allowed if the subscriber already owns a house.)

4. Treatment of specified illnesses, including hospitalisation and treatment expenses for diseases such as cancer, kidney failure, primary pulmonary arterial hypertension, multiple sclerosis, major organ transplant, coronary artery bypass graft, and others.

5. Medical and incidental expenses arising from the disability or incapacitation suffered by the subscriber.

6. Expenses incurred for skill development/re-skilling.

7. Expenses incurred by the subscriber for the establishment of his/her venture or any startup.

Partial pension withdrawals: Requirements

a) NPS subscribers should have been members of the system for a minimum of three years from the date of joining.

b) The partial withdrawal amount should not exceed one-fourth of the subscriber's total contributions in their individual pension account.

c) Subscribers are allowed a maximum of three partial withdrawals during their entire subscription tenure under the NPS.

Eligibility criteria, limit, and frequency for partial withdrawal

The subscriber must be a member of the National Pension System for at least three years from the date of joining.
 

The partial withdrawal amount should not exceed 25 per cent of the subscriber's total contributions in their individual pension account, excluding the employer's contribution, as of the date of the withdrawal application.

Subscribers are allowed a maximum of three partial withdrawals during their entire subscription tenure, with subsequent withdrawals limited to incremental contributions made since the last partial withdrawal.

Withdrawal request processing

To initiate the withdrawal request, the subscriber must submit the withdrawal request and a self-declaration stating the purpose for withdrawal to the central recordkeeping agency (CRA) through their respective government nodal office or point of presence.

Processing and verification

Upon receiving the withdrawal request, the Point of Presence or Government Nodal Office will verify the subscriber's bank account through methods like "Instant Bank Account Verification". The CRA will process partial withdrawal requests post-successful verification of the subscriber's bank account.