Last Updated: December 27, 2022, 11:14 IST
In the wake of the Covid-19 pandemic, the Pension Fund Regulatory and Development Authority allowed NPS subscribers to partially withdraw their income. The subscribers via online self-declaration form could complete the process and money was transacted to their bank accounts. Now, the pension regulator has amended this rule and disallowed partial withdrawal of income from the National Pension Scheme.
The amendment is only for government sector subscribers and will be implemented from January 1. Government sector pensioners include the central government, state government, and central autonomous bodies employees. However, the partial withdrawal facility is allowed for non-government sector employees with an online self-declaration form. The Pension Fund Regulatory and Development Authority issued a notice on December 23 citing the change.
The notice read, “With the abating of the pandemic-related difficulties & relaxation of lockdown restrictions, the issue examined after taking into consideration of the prevalent practices, circumstances and law, it has been decided to make it mandatory for all the Government sector subscribers (central/state govt & central/state autonomous bodies) to submit their requests through their associated nodal offices”.
To protect subscribers’ interests and lessen the burden on nodal officers, including POPs from verification and authorization, PFRDA issued a circular in January 2021 allowing partial withdrawals under NPS through self-declaration for the benefit of subscribers as a special dispensation to cope with the Covid pandemic. According to the aforementioned circular, the subscribers’ online requests are immediately handled in the CRA system following Instant bank account verification online.
For the partial withdrawal of income, these are the conditions that should be met-
1)The customer should have been an NPS member for at least three years.
2) The withdrawal amount should not be more than 25% of the NPS subscriber’s contributions.
3) During the duration of the NPS subscription, the PFRDA permits a maximum of three partial withdrawals.
4) Withdrawal is only permitted for the reasons that are specifically listed, such as:
A) Children’s further education or marriage
B) The purchase or construction of a residential dwelling
C) The treatment of critical illnesses
The regulator reduced the obligation to submit supporting paperwork to prove the reasons for partial withdrawal during the Covid-19 pandemic.
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