NPS offers more flexible withdrawal strategies

The NPS (National Pension Scheme) has increasingly become a go-to option for retirement planning. Its subscriber base has vaulted eightfold in just 10 years, while its asset base has grown at a healthy 59 per cent each year. But despite its increasing stardom, the government-backed pension scheme has remained open to innovation. Its most recent change was to add more flexibility to its withdrawal policy. Earlier, upon retirement, its subscribers had to withdraw 60 per cent of their NPS corpus in a lumpsum. (The remaining 40 per cent is used to buy an annuity for regular income). But now, thanks to SLWs (systematic lumpsum withdrawals), subscribers can withdraw the money in a phased manner until they are 75. For example, you can now choose to withdraw a small portion of your NPS money each month between 60 and 75 and are not compelled to redeem it in one go any more. The second upside of this feature is that if you choose to withdraw your lumpsum in a phased manner until 75, your retirement savings stay in the market for a longer time. That's good because more time in the market typically translates to a higher corpus. However,

This article was originally published on May 15, 2024.