PFRDA Revamps NPS: In a major overhaul, the Pension Fund Regulatory and Development Authority (PFRDA) has reduced the minimum annuity limit to 20 per cent from 40 per cent for non-government employees
in the National Pension System (NPS). The amount that must be annuitized is now dependent on the size of the accumulated corpus (APW) at exit.
PFRDA has also introduced Systematic Unit Redemption (SUR), which is a mechanism for receiving the lump sum portion of the APW.
Instead of withdrawing the lump sum amount all at once, subscribers can use SUR mechanism to withdraw the amount in a phase manner, over a period of at least six years and a maximum of 15 years.
There are now three slabs depending on the size of the accumulated pension wealth (APW) at exit. Those with a corpus size of up to Rs 8 lakh will have the right to withdraw 100 per cent of the APW without any annuity purchase basis. For those in the range of Rs 8 lakh to Rs 12 lakh, they can take up to Rs 6 lakh or up to 80 per cent of APW. The rest of the amount must be utilized to purchase an annuity or Systematic Unit Redemption. The last category is Rs 12 lakh or above, they can take up to 80 per cent of APW, with a requirement to purchase annuity through remaining 20 per cent of APW.
| Accumulated Pension Wealth (APW) | Lump Sum Withdrawal | Annuity Requirement |
| Up to ₹8 Lakh | 100% of APW | Not mandatory |
| > ₹8 Lakh but ₹12 Lakh | Up to ₹6 Lakh OR up to 80% of APW | Balance of APW remaining after lump sum, to be used for annuity or Systematic Unit Redemption (SUR) |
| > ₹12 Lakh | Up to 80% of APW | At least 20% of APW |
The slab has so far remained the same for the government employees, with one exclusion for those having corpus above Rs 12 lakh, where they have to mandatorily purchase the annuity plan for at least 40 per cent of APW, while allowing to withdraw 60 per cent of corpus.
Premature Exit Changes
PFRDA has introduced a new minimum corpus limit for 100 per cent withdrawal, while keeping the annuity portion rule unchanged. For those who are looking for a premature exit from NPS, they can withdraw the entire 100 per cent of the corpus as a lump sum if their APW is less than Rs 5 lakh. In case it is above, they have to use at least 80 per cent of the APW to purchase an annuity, and can withdraw up to 20 per cent as a lump sum.
Upon Death Of Subscriber
In the event of the subscriber’s death, the nominee or legal heir is permitted to withdraw up to 100 per cent of the APW as a lump sum, or they can choose to utilize up to 100 per cent of the APW for an annuity.
