Major and relief changes have been made in the rules for those investing in the National Pension System (NPS). The direct objective of these new amendments is to provide maximum cash to investors after retirement and to make investment flexible. These decisions will help not only government but also private sector employees to manage their retirement planning in a better way. With these changes in the rules of NPS, more money will come into the hands of account holders and the process of withdrawing money will become much simpler than before.
Now allowed to continue NPS account till the age of 85 years, maximum time limit extended
The biggest change has been made regarding the age limit of investment. Till now the maximum age to remain in NPS was 75 years, which has now been increased to 85 years. This means that if an investor wants to grow his money even after 60 years and does not want to withdraw immediately, he will now have an additional time of 10 years. This is a great move for those who want to take advantage of compounding on their retirement funds over the long term.
More money will come in the pocket of private employees, it is necessary to take pension plan with only 20 percent fund.
The rules regarding use of pension fund have also been liberalized. Under the new rules, it will now be mandatory for private sector employees to invest at least 20 percent of the total corpus in purchasing annuity (pension plan). Earlier this limit was different, due to which less cash was available in hand. This change simply means that at the time of retirement, employees can withdraw a larger lump sum, which will leave them with more money in their pocket to spend.
Money will not get stuck if funds are less, freedom to withdraw deposits up to Rs 8 lakh in lump sum
This is a great news for small investors or account holders with less funds. If the total corpus of a member is Rs 8 lakh or less, then he will no longer be obliged to buy a pension plan. Such investors can withdraw their entire deposit amount at once. This will benefit those people whose NPS fund is not very big, because they will now be able to use their entire money as per their wish.
New option to get money in installments through systematic withdrawal, you will be able to plan according to your need.
Flexibility has also been brought in the methods of withdrawing money. Special arrangements have been made for investors whose total corpus is between Rs 8 lakh and Rs 12 lakh. Such investors can withdraw up to Rs 6 lakh in lump sum and receive the remaining amount in installments through ‘Systematic Lump Sum Withdrawal’ (SLW). Different options for withdrawing money in installments have been given to government and private employees, in which they can take the remaining amount in installments for 6 years or can buy a pension plan from it.
If needed, partial withdrawal can now be done four times, major relaxation in rules
Now you will get more convenience even in case of sudden need of money during job or investment period. Now partial withdrawal can be made a maximum of four times during the service period, whereas earlier this limit was only three times. However, a condition to avail this facility is that there must be a gap of at least four years between two withdrawals. This change will prove helpful for expenses like medical emergency or children’s education.
Those who remain invested even after 60 years will get the facility to withdraw money intermittently.
Those who want to continue in the scheme even after the age of 60 years, they will also now be able to withdraw money from time to time. According to the new provisions, partial withdrawal will be possible even after 60 years, but for this a gap of three years will have to be kept between two withdrawals. Also, investors will be able to withdraw only a maximum of 25 percent of the contribution made by them. This rule will help the elderly to maintain liquidity i.e. cash flow.
