In what could be a big relief for the National Pension Scheme (NPS) subscribers, India's pension regulator has eased the norms for the partial withdrawals under the scheme. The subscribers can now withdraw up to 25 percent of the savings for treatment of critical illnesses, higher education and marriage of children, among others.
In a circular on Wednesday, January 17, the Pension Fund Regulatory and Development Authority (PFRDA), stated that NPS subscribers who have contributed for three years are now permitted to withdraw up to 25 percent of the savings for meeting specified expenses.
The 'specified purposes' include the purchase of residential premises, treatment of critical illness, higher education and marriage of children etc. The new rules have come into effect from January 10, 2018, onwards.
Here are five things to know about the relaxation of NPS withdrawal rules:
1. An NPS subscriber can avail the withdrawal benefit for the higher education of his or her children including a legally adopted child.
2. The subscriber withdraw the NPS amount for the marriage of his or her children, including the legally adopted child.
3. Partial withdrawal can be done for the purchase of residential premises in his or her name or jointly with his or her legal spouse. If the subscriber already has a residential house or flat other than ancestral property, individually or in joint name, no withdrawal of the pension amount will be permitted.
4. The NPS account holder can partially withdraw the amount for the treatment of specified illnesses. The amount can be withdrawn for the treatment of critical illness of the NPS subscriber and legal partner, children, legally adopted child or dependent parents. The withdrawal up to 25% can be made allowed only if the diseases suffered fall in the category of diseases such as cancer, kidney failure, multiple sclerosis, major organ transplant, stroke, heart valve surgery, coma etc.
5. The withdrawal will be permitted only three times during the tenure of the scheme's subscription.
Launched in 2004, NPS is a government-backed pension scheme which offers tax benefits for the subscribers.