Answering a question, Shiv Pratap Shukla, Minister of State for Finance, said in a written reply in Rajya Sabha that PFRDA has relaxed the norms related to partial withdrawal facility in NPS.
NPS subscribers who have contributed for at least three years can now withdraw 25% of the accumulated corpus. Earlier, NPS subscribers were allowed to withdraw their corpus after completion of 10 years.
In a press release issued by PIB, the Minister said, “The subscriber ought to be subscribed to the NPS, at least for a period of 3 years from the date of his or her joining to such system, to be eligible to make partial withdrawals, under specific circumstances. The NPS subscribers can withdraw after 3 years from the date of joining the system and a maximum of 3 times during the entire tenure of subscription under NPS, but the partial withdrawal is linked with contributions made by the subscriber. The subscriber shall be permitted to withdraw accumulations not exceeding 25% of the contributions made by him or her and standing to his or her credit in his or her individual pension account, as on the date of application for withdrawal.”
This amount will be tax free in the hands of subscribers.
In addition, PFRDA has done away with the requirement of maintaining a gap of at least five years between the partial withdrawals. With this, NPS subscribers can withdraw their accumulated corpus anytime; however, they can avail this facility for three times.
Currently, NPS subscribers can withdraw partially 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.
Like NPS, EPFO also allows partial withdrawals. However, since there is no such limit on withdrawals, many people pull out their money from their EPFO account. As a result, many subscribers are left with a small corpus for their post-retirement days defeating the very purpose of EPFO.
