NPS rule change from April 1: Here’s what subscribers need to know before pension withdrawal
NPS rule change from April 1: The Pension Fund Regulatory and Development Authority, through a circular dated February 22, 2023, had announced that the mandatory uploading of documents from the beginning of FY24 would be in the best interest of subscribers, ensuring that they receive their annuity income in a timely manner.
NPS rule change from April 1: With an aim to make annuity payments faster and simpler for subscribers, the pension regulator has made uploading certain documents mandatory for national pension scheme (NPS) subscribers from Saturday, April 1, 2023, which denotes the beginning of the new financial year 2023-24 (FY24).
The Pension Fund Regulatory and Development Authority, through a circular dated February 22, 2023, had announced that the mandatory uploading of documents from the beginning of FY24 would be in the best interest of subscribers, ensuring that they receive their annuity income in a timely manner.
The regulator had said that this mandatory uploading of documents is for those NPS subscribers who want to withdraw their pension corpus. The documents that are needed to be uploaded are:
a) NPS exit/withdrawal form
b) Proof of identity and address as specified in the withdrawal form
c) Bank account proof
d) Copy of the permanent retirement account number (PRAN)
The regulator has requested associated nodal officers/POPs/corporate to educate subscribers about the importance of uploading documents and perform quality checks on the legibility of those documents.
With this modification, subscribers will have an easier and paperless NPS withdrawal procedure.
Also Read: Taxpayers Alert: These 10 income tax changes will be applicable from April 1
Following are the steps to withdraw NPS for subscribers:
a) The subscriber will initiate an online exit request by logging into the central recordkeeping agency (CRA) system.
b) Relevant messages about e-Sign/OTP authentication, authorisation of request by nodal office/POP, etc., will be displayed to the subscriber at the time of the initiation of the request.
c) Details like nominee details, bank details, and address, among others, will be auto-populated from the NPS account during request initiation.
d) The subscriber will have to choose the fund allocation percentage for a lump sum and/or annuity, as well as provide annuity details, and other relevant information.
e) The subscriber's bank account will be verified through the online bank account verification process, which was registered in CRA.
f) Know-your-customer (KYC) documents such as identity and address proof, along with a copy of the PRAN card/ePRAN, and the bank proof need to be uploaded at the time of submitting the exit request.
g) Scanned documents along with images should be legible and appropriate.
h) The NPS subscriber authorises the request by using either OTP authentication or e-Sign using Aadhaar.
At the time of maturity, an NPS subscriber must currently use at least 40 per cent of the total collected corpus to buy an annuity plan. A lump sum withdrawal of the remaining 60 per cent of the NPS corpus is possible.
A complete lump sum withdrawal at maturity is a possibility for the subscriber if the total corpus is less than or equivalent to Rs 5 lakh. An NPS subscriber who wishes to retire early must purchase an annuity from a life insurance firm for 80 per cent of the total NPS corpus.
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