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NPS New Partial Withdrawal Rules 2024
NPS New Partial Withdrawal Rules 2024: The Pension Fund Regulatory and Development Authority (PFRDA) has recently issued a master circular, effective from February 1, 2024, outlining guidelines for the partial withdrawal of funds invested in the National Pension System (NPS). The revised regulations emphasize specific purposes for which partial withdrawals are permissible, bringing clarity and aligning policies with evolving needs.
Homeownership Support: Changes in NPS Partial Withdrawal Rules 2024
Clarification on Conditions
One significant update in the PFRDA circular pertains to the conditions for partial withdrawal. Subscribers are now allowed to make partial withdrawals exclusively for the purchase or construction of their first house. Notably, if a subscriber already owns a residential property (excluding ancestral property), they are ineligible for partial withdrawals.
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Eligibility Criteria for NPS Partial Withdrawals
NPS New Partial Withdrawal Rules 2024: According to the new rules, subscribers can opt for partial withdrawals under the following circumstances:
- Higher education expenses for the subscriber’s children, including legally adopted children.
- Marriage expenses for the subscriber’s children, extending to legally adopted children.
- Purchase or construction of a residential house or flat in the subscriber’s name or jointly with their legally wedded spouse. No withdrawal is permitted if the subscriber already owns a residential property, other than ancestral.
- Treatment of specified illnesses, covering hospitalization and treatment expenses for conditions such as cancer, kidney failure, primary pulmonary arterial hypertension, multiple sclerosis, major organ transplant, coronary artery bypass graft, and Covid-19.
- Medical and incidental expenses arising from the disability or incapacitation suffered by the subscriber.
- Expenses for skill development or re-skilling.
- Expenses incurred by the subscriber for establishing their venture or any start-up.
Guidelines for Partial Withdrawals From NPS
To avail of partial withdrawals, NPS subscribers must have been members for a minimum of three years from the date of joining. The withdrawal amount should not exceed one-fourth of the subscriber’s total contributions in their pension account. Subscribers are allowed a maximum of three partial withdrawals during their entire subscription tenure, with subsequent withdrawals based on incremental contributions made since the last partial withdrawal.
Insight into NPS Fund Allocation
Investment Options in NPS
The NPS provides flexibility in fund allocation, allowing subscribers to choose between Auto and Active choice investment options. Under the Active choice, subscribers have the autonomy to decide the proportion of each asset class in their portfolio. In contrast, the Auto choice allocates assets automatically based on the subscriber’s age and risk profile.
Investment Asset Classes in NPS
Funds in NPS are invested across various asset classes, denoted by ECG—Equity (E), Corporate Debt (C), Government Securities (G), and Alternative Investment Funds (A). Each asset class presents a distinct risk-return profile, offering access to diverse market instruments.
Under both investment options, the maximum allocation to Equity is capped at 75 percent, providing subscribers with the opportunity to tailor their portfolio based on their risk appetite and financial goals.
As NPS continues to evolve, these rules aim to cater to the diverse financial needs of subscribers, ensuring responsible and strategic utilization of pension funds.