The National Pension Scheme (NPS) is a social security initiative by the Central Government and is open to employees from the public, private and even the unorganised sectors. NPS encourages people to invest in a pension account at regular intervals during the course of their employment. After retirement, the subscribers can take out a certain percentage of the corpus. NPS is regulated by the Pension Fund Regulatory and Development Authority (PFRDA).
The number of subscribers in various pension schemes rose 24 per cent to 4.63 crore at the end of September 2021, the pension fund regulator said in a statement,
Recently, there were several changes to NPS rules. Take a look:
1) Entry age increased
The pension fund has revised the guidelines on entry into NPS to 70 years. Earlier the entry age was 65 years. The entry age for NPS has been revised to 18-70 years from 18-65 years. Any Indian citizen and Overseas Citizen of India (OCI) in the age group of 65-70 years can also join NPS and continue up to the age of 75 years, according to a PFRDA circular on the revised guidelines.
2) Exit norms revised
On the exit conditions for subscribers joining NPS beyond the age of 65 years, the circular said “normal exit shall be after 3 years”. “The subscriber will be required to utilise at least 40 per cent of the corpus for purchase of annuity and the remaining amount can be withdrawn as a lump sum,” it said. However, if the corpus is equal to or less than ₹5 lakh, the subscriber may opt to withdraw the entire accumulated pension wealth in a lump sum, it said.
3) Asset allocation norms changed
Making the National Pension System (NPS) more attractive for subscribers joining it after 65 years of age, the PFRDA has permitted them to allocate up to 50 per cent of the funds in equity. The maximum equity exposure, however, will be only 15 per cent if subscribers joining NPS beyond the age of 65 years decide to invest under the default ‘Auto Choice’.
4) Premature exit
The PFRDA further said exit before the completion of three years will be treated as ‘premature exit’. Under premature exit, the “subscriber is required to utilise at least 80 per cent of the corpus for purchase of annuity and the remaining can be withdrawn in alump sum”. In the case of premature exit, if the corpus is less than ₹2.5 lakh, the subscriber may opt to withdraw the entire accumulated amount in one go.
5) Defer NPS account till 75 years
NPS account holders have been permitted to defer their account up to the age of 75 years.
6) Extension of the online exit process to the Government sector
PFRDA recently extended the online and paperless process of exit to the subscribers of the Government Sector. Earlier, only non-government sector subscribers enjoyed the end-to-end facility of the online exit process. “The online exit would be integrated with Instant Bank Account Verification as per the existing guidelines as part of enhanced due diligence in the interest of Subscribers. The facility would also be available to the employees of Autonomous Bodies of Central/State Government who are covered in NPS.”the regulator said in a circular dated 4 October 2021.
Source: Live Mint