PFRDA has instructed its intermediaries like nodal office, POPs and aggregators to process partial withdrawal request of NPS subscribers with immediate effect.
That means, intermediaries will have to verify the veracity of such requests. Intermediaries will have to send the request form to central record keeping agency (CRA) for processing.
In a circular, PFRDA has said, “Partial withdrawal request is required to be submitted by subscriber to CRA through his/her nodal office/POP/Aggregator, as may be applicable. The intermediaries should satisfy itself about the genuineness of the requirement for partial withdrawal by the subscriber and after satisfying itself forward the withdrawal application for release of funds by CRA. On receipt of partial withdrawal request, CRA will process the withdrawal request in the CRA system.”
Last year, PFRDA had allowed partial withdrawal of up to 25% in NPS from subscriber’s contribution. This option is allowed for subscribers having contribution in account for at least 10 years. However, NPS subscribers can only withdraw for higher education or marriage of their children, construction or purchase of first house and treatment of specific ailments like cancer, kidney failure, paralysis etc. PFRDA has stipulated a gap of minimum five years between withdrawals. Also the maximum number of withdrawals is three. However, there is no such limit if withdrawal is made for illness.
Apart from this, NPS has three exit options which were conditional on attaining normal superannuation or 60 years of age. Under the first option, 60% of accumulated corpus can be withdrawn as a lump sum payment and annuitizes for monthly payouts. Similarly, if a subscriber exits before attaining the age of 60 years, 80% of accumulated corpus is annuitized. In case of death, the entire accumulated corpus is paid to the nominee or legal heir of the subscriber.
Recently, PFRDA has come out with a draft circular on Retirement Adviser (RA) in which it has proposed to allow IFAs and corporates to distribute NPS.
Currently, NPS is distributed through points of purchase (POPs). POP is an entity that sells pension products to subscribers. These entities act as collection points and extend a number of customer services to NPS subscribers, including requests for withdrawal from NPS. Almost all banks (both private and public sector) and majority of stock broking firms are NPS POPs. The commission to such POS is currently capped at 0.25% of the transactions subject to a minimum of Rs.20 and maximum of Rs. 25,000. POP can also charge Rs. 100 for initial subscriber registration and Rs. 20 for incorporating any change in subscribers account.