National Pension System: The Pension Fund Regulatory and Development Authority (PFRDA) has increased the maximum age of joining the National Pension System (NPS) to 70 years. Also, the NPS account holders have been permitted to defer their account up to the age of 75 years.
“In response to the large number of requests received from the existing Subscribers to remain invested under NPS beyond 60 years or beyond their superannuation, and the desire from citizens above 65 years to open NPS, it has been decided to increase the entry age of NPS in the interest of Subscribers and benefit them with the opportunity of creating a long term sustainable pension wealth,” PFRDA said.
The pension regulator has announced unique features and benefit for those joining NPS after the age of 65 years.
Maximum equity exposure allowed
According to the PFRDA circular dated 26th August 2021, subscribers joining the NPS after crossing the age of 65 years can exercise the choice of PF and Asset Allocation with the maximum equity exposure of 15% and 50% under Auto and Active Choice respectively.
Such subscribers can also change the Pension Fund once per year while the asset allocation can be changed twice.
“The Subscriber, joining NPS beyond the age of 65 years, can exercise the choice of PF and Asset Allocation with the maximum equity exposure of 15% and 50% under Auto and Active Choice respectively. The PF can be changed once per year whereas the asset allocation can be changed twice,” PFRDA said.
Who can open NPS account after 65 years?
Any Indian Citizen, resident or non-resident, and Overseas Citizen of India (OCI) between the age of 65-70 years can join NPS and continue or defer their NPS Account up to the age of 75 years, according to the regulator.
New Exit and Withdrawal Rules
Subscribers joining NPS beyond the age of 65 years can exit normally after 3 years. S/he will be required to utilize at least 40% of the corpus for the purchase of annuity and withdraw the remaining amount as a lump sum. However, if the corpus is equal to or less than Rs 5 lakh, the subscriber will have the option to withdraw the entire accumulated pension wealth in a lump sum.
Premature exit is also allowed before the completion of 3 years. In this case, the subscriber will have to utilize at least 80% of the corpus for the purchase of annuity. S/he can withdraw the remaining in a lump sum. In case the corpus is equal to or less than ₹2.5 lakh, the subscriber can withdraw the entire accumulated pension wealth in a lump sum.
In case of the unfortunate death of the subscriber, the entire corpus will be paid to the nominee of the subscriber as a lump sum.
The subscribers will also be eligible to open Tier II Accounts for investing their disposable income to optimize their returns. Unlike the NPS Tier-1 account, Deposits in the Tier-II account can be withdrawn at any time.