Retirement Corpus Access
Upon reaching the age of 60, or at any point thereafter, NPS subscribers have the option for a complete withdrawal of their accumulated funds. This full
withdrawal is permissible provided the total NPS corpus does not surpass Rs 8 lakh. This threshold was recently enhanced by the Pension Fund Regulatory and Development Authority (PFRDA) from its previous limit of Rs 5 lakh. If the total corpus exceeds Rs 8 lakh, the proportion that must be invested in an annuity to provide a regular income stream varies. For non-government subscribers whose corpus goes beyond Rs 12 lakh, a minimum of 20 percent must be used for annuity purchase, while the remaining up to 80 percent can be taken as a lump sum, though only 60 percent of this lump sum is tax-exempt. In contrast, government employees with a corpus exceeding Rs 12 lakh are required to allocate at least 40 percent to purchasing an annuity, with the balance of up to 60 percent available for lump-sum withdrawal.
Premature Exit Provisions
NPS also allows for a voluntary premature exit before the age of 60, but this is subject to stringent conditions. To be eligible for such an exit, a subscriber must have been enrolled in the NPS for a minimum of five years. In cases of premature exit, a full withdrawal of the entire corpus is only an option if the total accumulated amount is Rs 5 lakh or less. Should the corpus exceed Rs 5 lakh at the time of voluntary premature exit, the subscriber is mandated to use at least 80 percent of the accumulated funds to purchase an annuity. Only the remaining portion of the corpus is then eligible for lump-sum withdrawal. This rule ensures a baseline level of retirement income is secured even with early access to funds.
Death Benefit Payout
In the unfortunate event of a subscriber's demise, the entire NPS corpus is passed on to the designated nominee or legal heir. This provision is irrespective of the total accumulated amount in the account. There is no requirement for the nominee or legal heir to purchase an annuity with any portion of the corpus. They have the right to withdraw 100 percent of the accumulated corpus in a single payment, offering immediate financial relief and flexibility to the beneficiaries during a difficult time. This represents the most straightforward scenario for complete corpus withdrawal without any restrictions based on amount or annuity purchase.
