Here’s what you need to know

Investors putting money into the National Pension Scheme (NPS) will be surprised when the Pension Funds Regulatory and Development Authority (PFRDA) announced new rules regarding withdrawals of funds. Start with,

As of January 1, 2023, partial online deduction from the National Pension Scheme (NPS) account by self-declaration will be unavailable for public sector subscribers. This change to the Partial Withdrawal Rule affects Central Government, State Governments, and Central and State Autonomous Agencies NPS Subscribers. All government sector subscribers must now submit their applications through their associated nodal offices, in accordance with the new PFRDA terms of reference. However, the partial opt-out facility via self-declaration will remain available to voluntary non-government NPS subscribers.

The PFRDA, in a circular dated December 23, 2022, shared: “With the easing of pandemic-related difficulties and the easing of lockdown restrictions, the matter being considered after consideration of practices, circumstances and law it has been decided to make it mandatory for all subscribers in the government sector (Central/State Government and Central/State Autonomous Agencies) to submit their applications through their associated nodal offices.”

“Subscribers belonging to the voluntary segment of the NPS (all citizens and businesses) can continue to use the process as mentioned in the cited circular,” PFRDA added.

Partial withdrawal rules are however subject to the following conditions.

• Subscribers must have invested in the NPS for at least three years.
• The withdrawal amount must not exceed 25% of the NPS subscriber’s contributions.
• The PFRDA allows a maximum of three partial withdrawals during the life of the NPS subscription.
• Withdrawal is only permitted for specified reasons, for example:
• –The higher education of children
• -Child marriage
• -Buy or build one residential property
• -Treatment of serious illnesses