Let's understand if premature withdrawal from NPS is possible and what are the NPS exit rules
20-Apr-2023 •Ravi Banagere
I have invested Rs 50,000 in NPS in December 2019 for tax saving. Now I want to withdraw this amount, please advise me how to withdraw the same. - Anonymous
Investing in NPS Tier I comes with the condition that your money will be locked until you turn 60. However, there are certain conditions and restrictions that apply if you want to withdraw your money before that.
Under certain specified conditions such as higher education, marriage, purchase of a house, etc., you can withdraw up to 25 per cent of the accumulated corpus. But you can only do that after completing a minimum of three years in the scheme.
Since you invested in NPS in 2019, it has been over three years now and you can withdraw up to 25 per cent of the accumulated corpus. Assuming Rs 50,000 is your total accumulated corpus and you have not made any other contributions, 25 per cent of it comes out to be Rs 12,500.
Premature exit from NPS
If you wish to close your NPS account prematurely, you can do so only after completing 10 years. Additionally, at least 80 per cent of the accumulated NPS amount must be utilised to purchase an annuity that provides a monthly pension to the subscriber. The balance is paid as a lump sum payment to the subscriber.
However, if the total accumulated corpus is less than Rs 5 lakh, the subscriber may opt for 100 per cent lump sum withdrawal.
How to exit from NPS
To withdraw your NPS investment, you need to
The withdrawal request will be processed within three to five working days.
However, we strongly recommend that you avoid premature withdrawal unless it is an emergency and you have no other options. The main objective of having restrictions on withdrawal from NPS is to prevent you from using your retirement money elsewhere and to protect your golden years. The NPS account allows you to invest up to 75 per cent in equity, which is a reasonably good allocation for retirement accumulation.
Also read:
Can I invest more in an NPS Tier I account?
What is the difference between NPS and EPF for retirement planning?
Comparing large-cap and debt funds with NPS Tier 2
How to close Atal Pension Yojana account?
Can I invest more amount in NPS Tier-1 account?
How to move your corpus to an equity fund?
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