Very Soon NPS Systematic Lump Sum withdrawal (SLW) will be a new reality. In this post we will enlist all possible ways of NPS Withdrawal for Govt. Employees and non Govt. Employees. Taxability of NPS withdrawals and how you can make NPS withdrawal.
Table of Contents
National Pension System (NPS) Withdrawal Rules 2023
Currently there are 5 conditions under which one can withdraw NPS.
- Normal Exit ( at age 60 or beyond)/Superannuation
- Premature Exit / Voluntary retirement ( Exit before age 60 or superannuation)
- Unfortunate death before age 60
- Exit & withdrawal due to disability and in-capacitation
- Deferment under NPS
Normal Exit ( at age 60 or beyond)/Superannuation
Govt. Employees
| Condition | NPS withdrawal Rules for Govt. Employees at age 60 |
| Corpus equal to 5 lac or below | 100% withdrawal possible |
| Corpus ABOVE 5 lac | 60% amount – eligible for withdrawal 40% amount- Compulsory purchase of Annuity plan and take pension |
| Unfortunate death of subscriber after age 60/superannuation | 60% amount – eligible for withdrawal 40% amount- Compulsory purchase of Annuity plan and take pension ( for dependent) |
Non Govt. Sector
| Condition | NPS withdrawal Rules for Non Govt. Sector at age 60 |
| Corpus equal to 5 lac or below | 100% withdrawal possible |
| Corpus ABOVE 5 lac | 60% amount – eligible for withdrawal 40% amount- Compulsory purchase of Annuity plan and take pension |
| Unfortunate death of subscriber after age 60/superannuation | Lump sum is paid to the nominee. However nominee can opt for pension, if he/she wants to. |
NPS Premature Exit Rules/ Voluntary retirement ( Exit before age 60 or superannuation)
Govt Employees
| Condition | NPS Premature Exit Rules for Govt. Employees before age 60 |
| Corpus equal to 2.5 lac or below | 100% withdrawal possible |
| Corpus ABOVE 2.5 lac | 20% amount – eligible for withdrawal 80% amount- Compulsory purchase of Annuity plan and take pension |
| Other Option | Subscriber can opt and continue under all citizen model ( after inter sector shifting) |
Non Govt Sector
| Condition | NPS Premature Exit Rules for Non Govt. Sector before age 60 |
| For any premature Exit | NPS Account should be 5 year old |
| Corpus equal to 2.5 lac or below | 100% withdrawal possible |
| Corpus ABOVE 2.5 lac | 20% amount – eligible for withdrawal 80% amount- Compulsory purchase of Annuity plan and take pension |
NPS Withdrawal in case of Unfortunate death before age 60 /Superannuation
Govt. Employees
| Condition | NPS Withdrawal in case of Unfortunate death before age 60 /Superannuation |
| Corpus equal to 5 lac or below | 100% withdrawal possible |
| Corpus ABOVE 5 lac | 20% amount – eligible for withdrawal 80% amount- Compulsory purchase of Annuity plan by dependent and take pension |
| Unfortunate death of subscriber after age 60/superannuation | 60% amount – eligible for withdrawal 40% amount- Compulsory purchase of Annuity plan and take pension ( for dependent) |
Non Govt Sector
| Condition | NPS Withdrawal in case of Unfortunate death before age 60 /Superannuation ( Non Govt. Sector) |
| Entire corpus | 100% withdrawal possible |
Continuation NPS contribution till Age 75
Govt Employees
| Condition | Continue NPS contribution for Govt. Employees |
| Continue Subscription | Subscriber can continue NPS subscription and make payment to avail tax benefit till age 75 |
| Exit anytime | Subscriber can exit and start pension anytime from NPS |
Non Govt Sector
| Condition | Continue NPS contribution for Non Govt. sector |
| Continue Subscription | Subscriber can continue NPS subscription and make payment to avail tax benefit till age 75 |
| Exit anytime | Subscriber can exit and start pension anytime from NPS |
| If no option Chosen | If the subscriber does not choose either to continue/stop contribution then he/she will be be enrolled under continuation of NPS subscription till age 75. However one is free to exit anytime. |
Deferment of NPS pension
Govt. or non Govt. sector subscriber can choose to defer( delay- do not take money) the withdrawal till age 75. Various deferment options are available under this.
- Defer annuity (pension) only ( can defer for 3 years only)
- Defer Lump sum only ( can defer for 10 years only)
- Defer both
- One can opt to take lumpsum amount in phased manner ( up to 10 instalments) till age 70
For instance Mr. Bestii at the age of 60 decides to defer his lump sum payment( 60% money) and steadily start taking the pension from the beginning itself.
NPS Exit & withdrawal due to disability and in-capacitation
If Subscriber is physically incapacitated or has suffered a bodily disability leading to his incapability to continue NPS subject to the Subscriber submitting a disability certificate from a Government surgeon or Doctor (treating such disability or invalidation of Subscriber) stating the nature and extent of disability and also certifying that:
- the affected Subscriber shall not be in a position to perform his regular duties and there is a real possibility of the affected Subscriber, being not able to work for the remaining period of his life.; and
- Percentage of disability is more than 75 % in the opinion of such Government surgeon or doctor (treating such disability or invalidation of Subscriber).”
It means such cases shall be handled similarly to exit cases at the age of superannuation or at the age of 60 years.
Govt. Employees
| Condition | NPS Exit & withdrawal due to disability and in-capacitation |
| Corpus equal to 5 lac or below | 100% withdrawal possible |
| Corpus ABOVE 5 lac | 60% amount – eligible for withdrawal 40% amount- Compulsory purchase of Annuity plan and take pension |
Non Govt. Sector
| Condition | NPS Exit & withdrawal due to disability and in-capacitation |
| Corpus equal to 5 lac or below | 100% withdrawal possible |
| Corpus ABOVE 5 lac | 60% amount – eligible for withdrawal 40% amount- Compulsory purchase of Annuity plan and take pension |
What is NPS Systematic Lump Sum Withdrawal ( SLW)?
Under NPS Systematic Lump Sum Withdrawal ( SLW) option, the subscriber can withdraw lump sum amount (after age 60) in a systematic way. The SLW option is explained under deferment of NPS option.
NPS Systematic Lump Sum Withdrawal ( SLW) is valid for NPS Tier 1 only. Once subscriber opt NPS SLW, further contribution to NPS is not available.
Under Systematic Lump Sum Withdrawal ( SLW), subscriber can withdraw the money (60% of corpus) in one shot or on annual basis also. In case of annual withdrawal, the withdrawal request has to be submitted on each withdrawal.
Mr. Bestii Singh,60, opts for NPS Systematic Lump Sum Withdrawal ( SLW). Let’s assume his 60% money amounting Rs. 1 Cr. Now at age 60 Bestii Singh can withdraw entire 1 Cr in one shot or in instalments. Here, in case of annual instalment he has to make NPS withdrawal request every year.
PFRDA proposes to pay lump sum systematically ( On one-time request only)on a periodical basis i.e. monthly, quarterly, half-yearly, or annually for a period till age 75 in an automated manner. This may apply with both Tier I and II. But under SLW, Partial withdrawal won’t be allowed.
Subscriber can opt SLW any point of time in case of Tier II account, even before age 60.
Read more about National pension Scheme
