• Wed. Jun 7th, 2023

How to Leave the NPS: Know the Rules and the Process

    You have the choice to leave the NPS offline or online

You have the choice to leave the NPS offline or online

Subscriber has the option to defer lump sum and annual NPS withdrawal options after retirement, until age 75

The National Income System (NPS), administered by the Pension Fund Regulatory & Development Authority (PFRDA), is a voluntary retirement program for people who wish to earn a substantial income after reaching the age of 60. The NPS offers subscribers three different ways to exit: early exit/voluntary retirement, which allows subscribers to exit before age 60 and receive a retirement pension; normal exit, which allows subscribers to do so at age 60 or over and receive a retirement pension; and exit in the event of the unexpected death of an account holder.

The subscriber has the option of deferring the lump sum and annual NPS withdrawal options after retirement, until age 75. This plan must be given up after 75 years of age. The default option, however, allows annual withdrawals of at least 40% of the deposit amount and one-time withdrawals of the remaining 60%. In addition, the customer has the option of withdrawing the full amount once a year.

You have the choice of leaving the NPS offline or online. You can process your request by OTP or e-sign to exit the program online. Customers will be able to log into the Central Records Keeping Agency (CRA) system and file an exit request using the online process, according to the PFRDA. Here they have to provide information regarding the release.

The client can choose the option of a lump sum payment or an annual direct debit. The consumer needs to provide information regarding fund allocation, annuity service provider (ASP), annuity plan, etc. for that. KYC and other documents also need to be uploaded in addition to this. Next, POP uses “Instant Bank Account Verification” to confirm the customer’s bank account number and uploaded documents. The customer must also pay the associated fees for processing this request. These fees vary from a minimum of Rs 125 to a maximum of Rs 500, and they amount to 0.125% of the total capital.

Upon leaving the NPS, subscribers can benefit from tax advantages. The tax exemption applies to capital withdrawals up to 60% of the total accumulated pension assets. Also, money used to purchase an annuity (to receive a pension) is tax-free. However, annuity money that is withdrawn periodically as a pension is taxed according to the recipient’s tax bracket.

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