Big news for NPS investors. NPS, or the National Pension System, is a scheme designed to provide a steady income during retirement. The funds you contribute to this plan are accessible only when you retire, and you can start investing with as little as Rs 1000.
There are two types of accounts in NPS: Tier 1 and Tier 2. The Tier 1 account restricts withdrawals until retirement, while the Tier 2 account allows for withdrawals at any time. Many people mistakenly believe that they can only access their NPS funds after turning 60.
NPS Withdrawal Guidelines
The Pension Fund Regulatory and Development Authority (PFRDA) has updated the withdrawal rules for the National Pension System. These changes will take effect on February 1, 2024. Under the new regulations, NPS account holders will be limited to withdrawing a maximum of 25% of their total contributions, which includes both personal and employer contributions.
How to Access NPS Funds in an Emergency
Step 1: Visit the official NSDL website.
Step 2: Log in using your PRAN number and date of birth.
Step 3: Request a withdrawal.
Step 4: Submit the withdrawal form along with any necessary KYC documents.
Step 5: After verification, the funds will be released.
Key Rules for Withdrawals
1. If your account balance is under Rs 5 lakh, you can withdraw the full amount.
2. You must have been enrolled in NPS for at least 3 years.
3. Withdrawals are limited to three times throughout the duration of the scheme.
4. You can request early withdrawals only under specific circumstances, such as for your children’s higher education, marriage, purchasing a home, or in case of serious illness.
When is it possible to close your NPS account?
You can close your NPS account under certain circumstances. The government has set specific rules for this process. Based on the information available, the lock-in period for NPS is between 5 to 10 years, meaning you won’t be able to close your account during that time.