Premature exit rules modified! PFRDA gives one time option to these NPS subscribers

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Updated: Sep 24, 2020 4:13 PM

The new rule will help NPS Subscribers who have partly exited from NPS but thereafter desirous of continuing in NPS with the same PRAN.

nps premature exit rules, NPS Subscribers, final exit at age 60, National Pension System, Permanent Retirement Account Number, PRAN, pfrda,Under NPS, a subscriber can opt to either prematurely exit or opt for a final exit at the age of 60 years or on attaining superannuation.

The National Pension System (NPS) provides an opportunity to its subscribers to invest for their retirement through Pension Funds at a low cost. The beneficial features of NPS are its portability, flexibility, multiple convenient modes of depositing contributions, choice of pension funds, scheme preference, exclusive tax benefits, etc. Under NPS, the subscribers are allotted a Permanent Retirement Account Number (PRAN), which is unique, and the subscribers can have one active PRAN at any given point of time and hence the subscribers may open a new NPS Account after closing their existing NPS Account.

Under NPS, a subscriber can opt to either prematurely exit or opt for the final exit at the age of 60 years or on attaining superannuation or any time later as per regulations. In case of premature exit, up to 20% of the accumulated pension corpus in the PRAN can be withdrawn as lump sum and the balance (80% or above) has to be utilized to buy annuity plan from an Annuity Service Provider (ASP) empaneled by PFRDA.

In its latest communication, the regulator says that nowadays, PFRDA is receiving a lot of requests from the subscribers who have withdrawn their lump sum but have not yet availed the Annuity, and those subscribers subsequently decide to continue the NPS Account.

Now, these subscribers have the following options:

  1. Open a new NPS account with a new PRAN if they are otherwise eligible to join NPS.
  2. Continue in NPS with the same PRAN by redepositing the amount withdrawn earlier (upto 20%), into their NPS account (PRAN). The option of redeposit to continue the existing PRAN can be availed only once and needs to be deposited in one lump sum.

The enabling of redepositing the amount withdrawn earlier offers the benefit of preserving the legacy corpus and facilitating further accumulation in an uninterrupted manner to those NPS subscribers who have partly exited from NPS but thereafter are desirous of continuing in NPS with the same PRAN.

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