National Pension System (NPS) Lite Premature Exit Rule: The Pension Fund and Regulatory Development Authority (PFRDA) has made a change to the premature exit rule for the NPS Lite Swablamban scheme subscribers.
National Pension System (NPS) Lite Premature Exit Rule: The Pension Fund Regulatory and Development Authority (PFRDA) has made a change to the premature exit rule for the NPS Lite Swablamban scheme subscribers. As per the new decision of the regulator, NPS Lite subscribers can exit before the mandatory 25 years if their accumulated pension wealth is not more than Rs 1 lakh and they are not eligible for migrating to the Atal Pension Yojana (APY).
The maximum age limit for subscribing to APY is 40 years. So an NPS Lite scheme subscriber having up to Rs 1 lakh in their pension fund can make a premature exit. They can do this even if they have received Government co-contribution. However, the amount of the Government’s co-contribution will be deducted from the accumulated corpus of such subscribers seeking to exit prematurely.
The PFRDA said in a circular dated 2nd July 2021 that as per the 6th Amendment of Exit Regulations, the Swavalamban Subscribers whose accumulated pension wealth do not exceed Rs 1 lakh and if they are not eligible to migrate to APY can opt to prematurely exit with lump-sum payment.
The regulator further said that such subscribers “are not required to continue in the Swavalmban scheme for a minimum period of twenty-five years irrespective of the receipt of Govt of India (GoI) co-contribution under Swavalamban by them.”
“However, if GoI’s co-contribution was availed by those eligible Subscribers and the same shall be deducted along with the returns generated from the corpus at the time of their exit,” PFRDA further said.
Final corpus calculation on premature exit from NPS Lite
According to the circular, the accumulated corpus of those Swavalamban scheme subscribers seeking premature exit will be calculated after deducting Government’s co-contribution, if any, and the returns thereon.
PFRDA explained the corpus calculation with an example:
Suppose a Swavalamban Subscriber, who is aged 43 Years and cannot be migrated to APY, has a corpus of Rs 1,04,000 in his Swavalamban PRAN and out of which, Government of India’s co-contribution and returns constitute Rs 4500.
In this case, the pension regulator said that the subscriber will be eligible for the premature exit since the accumulated corpus in the PRAN would be Rs 99500 (Rs 104000-Rs 4500=Rs 99500).
How to apply?
For premature exit, NPS Lite Swavalamban Subscribers having up to Rs 1 lakh corpus can submit their withdrawal claims to the associated POPs/Aggregators. “Central Record Keeping Agency (CRA) is advised to communicate to the eligible Swavalamban Subscribers and POP/Aggregators about the clarification thus provided above,” the circular said.