Government allows premature withdrawal from New Pension Scheme
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As per a recent announcement by the Government, premature National Pension Scheme (NPS) withdrawals have been allowed from the new pension scheme fund. Keeping in mind the possibility of financial exigencies coming up, the government has decided to allow partial withdrawals for the NPS subscribers.

Previously, the minimum period for availing the option of partial withdrawal for the Tier-1 account under National Pension System was ten years from the date of joining. Now, the same has been reduced to 3 years for all subscribers under the Tier 1 account. This change will be considered valid from 10.08.2017. For the Tier-2 accounts, there is no restriction on withdrawals anyways.

Here are some important points related to the facility to allow partial withdrawals for Tier 1 accounts: –

1. The subscriber will be allowed three partial withdrawals during the subscription period under the NPS.

2. Each withdrawal cannot exceed 25% of the contribution made by the subscriber till date. This excludes the contribution made by the employer.

3. The gap of 5 years, which was the minimum period between partial withdrawals has also been done away with.

Proposals approved for Central Government Subscribers: 

Some proposals relating to the pattern of investment and choice of the pension fund for Central Government subscribers registered under the NPS have also been approved.

The major highlights of these proposals are: –

a. Choice of Pension Fund: 

Central Government Subscribers will now be able to choose between any of the available pension funds including private sector pension funds. They will also be allowed to change this option once every year. For new and existing central government subscribers the default option available would be the existing provision of a combination of Public Sector Pension Funds.

b. Choice of Investment patterns:

Central Government Employees would now be provided with the following investment options: 

1. Central Government Subscribers who are looking for stable returns with minimal market-related risk will have the option to invest the entire fund in Scheme G, which relates to Government Securities only.

2. For all those Central Government Subscribers who are looking for high returns will have the option to choose between the below-mentioned lifecycle-based schemes: –

3. Moderate Life Cycle Fund which will have a maximum of 50% exposure to equity when the age of the subscriber is 35 years and would taper-off from thereon.

4. Conservative Life Cycle Fund wherein the maximum exposure to equity will be 25% when the age of the subscriber is 35 years and would taper-off from thereon.

5. If the subscriber submits no particular choice, the present allocation pattern would be considered as the default option.

These announcements from the Government have come as welcome decision for the subscribers to NPS. It is hoped that it will encourage more individuals to subscribe to NPS and avail the various benefits that are on offer.

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