New NPS partial withdrawal rule

January 30, 2024: The Pension Fund Regulatory and Development Authority (PFRDA) in a circular issued on January 12 allowed subscribers to make partial withdrawals from their accumulated pension wealth in the National Pension System (NPS) for specific purposes.

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The authority has issued a master circular that will list out the new amended rules. It will be effective from February 1, 2024.

Purposes for which partial withdrawal is allowed

Higher education of the subscriber’s children, including a legally adopted child.
Marriage of the subscriber’s children, including a legally adopted child.
Purchase or construction of a residential house or flat in the subscriber’s own name or in joint name with their legally wedded spouse. However, if the subscriber already owns a residential house or flat (other than ancestral property), no withdrawal shall be permitted.
Treatment of specified illnesses, including hospitalisation and treatment expenses for diseases mentioned in the circular.
Medical and incidental expenses arising from the disability or incapacitation suffered by the subscriber.
Expenses incurred by the subscriber for skill development/re-skilling or any other self-development activities.
Expenses incurred by the subscriber for the establishment of her/his own venture or any start-ups.

See also: NPS Login: National pension Scheme login explained

Who is eligible for partial withdrawal?

The subscriber should be a member of the NPS for at least three years from the date of joining.
The partial withdrawal amount should not exceed 25% of the subscriber’s total contributions in their individual pension account, excluding the Page 5 of 6 employer’s contribution, as of the date of application for withdrawal. Returns generated on the contributions shall not be eligible for partial withdrawal.
A subscriber is allowed to make a maximum of three partial withdrawals during their entire subscription tenure under the NPS. For subsequent partial withdrawals, only incremental contributions made by the subscriber from the date of the previous partial withdrawal shall be allowed.

How to submit the NPS partial withdrawal request?

The subscriber, along with the withdrawal request should submit a self-declaration application that states the purpose for the withdrawal to the central recordkeeping agency through their respective government nodal office or point of presence, as the case may be. In case the subscriber is suffering from a disease as mentioned in the master copy, the withdrawal request can be submitted by the subscriber’s family member.

How can the partial withdrawal request processed and verified by the NPS?

The government nodal office who receives the withdrawal request will verify and then process the claim. The claim will be processed only on successful verification of the subscriber’s bank account.

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Anuradha Ramamirtham

With 16+ years of experience in various sectors, of which more than ten years in real estate, Anuradha Ramamirtham excels in tracking property trends and simplifying housing-related topics such as Rera, housing lottery, etc. Her diverse background includes roles at Times Property, Tech Target India, Indiantelevision.com and ITNation. Anuradha holds a PG Diploma degree in Journalism from KC College and has done BSc (IT) from SIES. In her leisure time, she enjoys singing and travelling.
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