Conditions For Partial Withdrawal And How To Apply For The National Pension Scheme
To provide citizens with affordable social security, the National Pension System (NPS) is a market-linked, defined contribution plan run by the Pension Fund Regulatory and Development Authority (PFRDA). Both companies and employees make contributions to this low-cost, tax-efficient plan.
The NPS platform offers a variety of models to cater to the needs of its many user segments, including:
- The Government model for Central and State Government Employees
- Mandatory for Central Government Employees (save for the Armed Forces) hired on or after January 1, 2004, among others. All State Governments, with the exception of West Bengal, have since implemented NPS for their workforces.
- The Corporate Model – Businesses can implement NPS for their staff, setting contribution rates in accordance with the employment circumstances.
The All Citizens Model enables all Indian citizens between the ages of 18 and 65 to voluntarily join the NPS.
NPS withdrawals are typically permitted up until the age of 60. However, there are several restrictions on early exit.
Partially withdrawing from the NPS
For a maximum of three times over the whole subscription period under the NPS, subscribers are permitted to make partial withdrawals under the plan of up to 25% of their own contributions at any time before exit from NPS Tier-I for specific purposes outlined in the regulations.
After making contributions for at least ten years, NPS Tier-1 permits partial withdrawals. However, there is no longer a set amount of time between two partial withdrawals.
Conditions for partial withdrawal include:
- for treatment of specified illnesses: if the subscriber, his legally wedded spouse, children, including a legally adopted child, or dependent parents suffer from any specified illness, which shall include hospitalisation and treatment.
- for higher education and marriage of children, including a legally adopted child. – for construction of a residential house or flat in own name or in a joint name with legally wedded spouse.
- To cover the costs incurred by the subscriber for skill upgrading or other self-development activities.
- To help subscribers cover the costs associated with starting their own businesses or other start-ups.
- To cover medical and other incidental costs incurred due to a disability or incapacitation.
How to submit a partial withdrawal application
Online requests for partial withdrawals can be made by subscribers. As an alternative, the Subscriber may send a paper copy of the partial withdrawal form (601-PW) and supporting documentation to POP, who will use that information to start an online request. POP must, however, “Authorise” the withdrawal request in the CRA system.
Subscribers can log in to the CRA system at www.cra-nsdl.com using PRAN as their user ID and password, and then choose “Tier I Partial Withdrawal.” Additionally, the subscriber must consent to the self-declaration of a partial NPS withdrawal.
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