National Pension System Archives

Will Unified Pension Scheme substantially impact NPS? – Times…

26 August 2024
by admin

Unified Pension Scheme: The government’s newly announced pension scheme, unveiled on Saturday, has the potential to significantly affect the National Pension System (NPS) if a majority of central government employees opt for the Unified Pension Scheme (UPS), as is anticipated.
However, according to an ET report, this impact may be mitigated if the NPS is designated to manage the individual pension fund, which is one of the two funds proposed under the UPS.
The individual fund will comprise the employee contribution, amounting to 10% of basic pay and dearness allowance, along with a matching contribution from the government.

Pension Scheme Subscribers

An additional government contribution of 8.5% of basic and DA for all employees will be maintained in a separate fund.
Presently, the NPS has 2.65 million central government subscribers, representing 27.1% of the scheme’s total corpus of Rs 12.8 lakh crore. The fate of this corpus remains uncertain as central government employees transition to the UPS, the financial daily’s report said.
The implementation of the new scheme is set to commence from April 1, 2025. If state governments also introduce UPS-like schemes and provide NPS subscribers with the choice to switch, the impact would be even more significant.
Also Read | Unified Pension Scheme vs OPS vs NPS: How is UPS different from National Pension Scheme, Old Pension Scheme?
The NPS currently has 6.7 million subscribers from states, accounting for 49.4% of the total scheme corpus. Collectively, state and central government employees make up more than three-quarters of the scheme’s corpus, according to the most recent data. The corporate sector subscribers amount to 2.1 million, with a total corpus of Rs 1.89 lakh crore, constituting 14.8% of the total.
The scheme offers tax benefits on contributions, and upon maturity, 60% of the corpus can be withdrawn tax-free, while the remaining balance must be used to purchase an annuity.

Science & Environment

NPS Partial Withdrawals: Is It Possible To Draw Part…

10 August 2024
by admin

New Delhi: The Indian government introduced the National Pension System (NPS), a pension cum investment plan to give people security for their old age. The Pension Fund Regulatory and Development Authority (PFRDA) oversees the scheme. After turning sixty years old, the NPS members start receiving their pension. Nevertheless, before turning 60 or upon attaining superannuation, some members desire to withdraw their accumulated wealth in NPS. Let’s go into more detail on early pension withdrawal and the requirements.

Before retiring, is it possible to take partial NPS withdrawals?

Without compromising their monthly stipend upon retirement or terminating their retirement account, NPS members can take partial withdrawals from their savings to fulfill specific requirements.

Conditions for NPS partial withdrawal

A circular defining the procedures for a partial withdrawal from the NPS was released by PFRDA on January 12, 2024, and became operative on February 1, 2024. According to the circular, partial withdrawal is allowed under the following conditions:

* You can withdraw funds for your children’s higher education.

* Funds can be withdrawn for your children’s marriage.

* Withdrawal is allowed when buying a house or repaying a home loan. However, neither you nor your spouse should already own a home.

* Withdrawals could be made to pay for medical expenses and hospitalization.

* Withdraw is allowed to start a business, or pursue a startup.

* Withdrawals could be made for skill development or self-development activities.

Eligibility requirements for NPS partial withdrawal

To be eligible for partial withdrawal from your NPS account, you need to fulfill the following conditions:

* You have been an NPS subscriber for at least 3 years from the date of your joining the scheme.

* During your entire subscription period, you are permitted to make a maximum of three partial withdrawals, with a minimum gap of five years between each withdrawal.

* You can withdraw only 25% of the contribution in NPS. However, withdrawals are not permitted from the employer’s portion of the contribution or from the returns generated on contributions.

Tax benefits on partial withdrawal from the NPS account

If you are taking partial pension withdrawals, you may be eligible for tax exemption on the amount withdrawn up to 25% of the self-contribution, on such terms and conditions as may be specified by PFRDA under section 10(12B).

What is the process for partially withdrawing from NPS?

You must apply to any government nodal agency connected to the NPS and provide a self-declaration outlining the reason for the withdrawal to make a partial withdrawal. After that, the application will be sent to the Central Record-keeping Agency (CRA) for verification and processing.

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