Understanding Partial Withdrawal Rules in the National Pension System (NPS)
MAS Team | 07 March 2024
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Contributing to the National Pension System (NPS) is a long-term investment aimed at wealth creation for retirement. However, unforeseen circumstances may necessitate the partial withdrawal of funds from an individual's pension account. The Pension Fund Regulatory and Development Authority (PFRDA) has laid down specific rules governing partial withdrawals, ensuring that subscribers can access their funds under certain conditions while maintaining the integrity of their pension accounts.
According to PFRDA regulations, subscribers are permitted to make partial withdrawals, limited to 25% of their contributions to their individual pension account, excluding the employer's contribution. The recent release of a master circular by the pension fund body further elaborates on the permissible reasons for partial withdrawals.
These reasons include:
- Financing higher education expenses for the subscriber's children, including legally adopted children.
- Funding marriage expenses for the subscriber's children, including legally adopted children.
- Acquiring or constructing a residential property in the subscriber's name or jointly with their spouse.
- However, no withdrawal is permitted if the subscriber already owns a house.
- Covering treatment expenses for specified illnesses, including hospitalization and critical diseases.
- Meeting medical expenses arising from disabilities.
- Investing in skill development by the subscriber.
- Funding expenses related to the establishment of the subscriber's own venture or start-ups.
To be eligible for partial withdrawal, a subscriber must have been a member of the NPS for a minimum of three years from the date of joining. Additionally, the partial withdrawal should not exceed 25% of the subscriber's total contributions to their individual pension account. Importantly, only three partial withdrawals are permitted during the entire subscription tenure under the NPS.
The process of initiating a partial withdrawal involves the subscriber submitting a withdrawal request along with a self-declaration stating the purpose of the withdrawal to the central recordkeeping agency (CRA) through their nodal office or point of presence. Upon receipt of the withdrawal request, the Point of Presence or Government Nodal Office will verify the beneficiary's details, and the CRA will process the partial withdrawal request accordingly.
In summary, while the NPS encourages long-term wealth creation for retirement, it also recognizes the need for subscribers to access funds in times of necessity. The clear guidelines provided by PFRDA regarding partial withdrawals ensure that subscribers can avail themselves of this facility judiciously, while safeguarding the integrity of their pension accounts.
Dear Investor,
In case of any grievance / complaint :
In case of any grievance / complaint :
- Please contact Compliance Officer Shraddha Mhatre at [email protected] and Phone No. - 91-22-35131664.
- You may also approach CEO Debashis Basu at email- id [email protected] and Phone No. - 91-22-35131664.
