NPS: Central govt employees will have to wait for 90 days for NPS lump sum withdrawal and annuity on resignation

NPS guidelines: Central government employees who resign from the will have to navigate a waiting period of 90 days before receiving their National Pension System (NPS) lump sum payments and annuities, according to an office memorandum shared by the Department of Pension and Pensioners’ Welfare (DoPPW).

Under the new guidelines for the NPS, any payments due to central government employees upon resignation will be delayed for 90 days following the effective resignation date. However, if an employee passes away during this waiting period, their eligible beneficiaries will receive payments immediately, in accordance with regulations from the Pension Fund Development and Regulatory Authority (PFRDA).

NPS entitlement guidelines clarify lump sum payments and annuities rules

The Department of Pension and Pensioners’ Welfare has released an important office memorandum detailing the entitlements for central government employees resigning under the NPS. The guidelines clarify the processes regarding lump sum payments and annuities for those who resign from service.

Also read: New NPS Rules: Central govt employees to enjoy bigger retirement corpus, higher pensions now

On October 7, 2024, the Ministry of Personnel, Public Grievances, and Pensions issued an office memorandum outlining the entitlements for Central Government servants covered under the National Pension System when they resign from their positions.

The memorandum references Rule 14 of the Central Civil Services (Implementation of NPS) Rules, 2021, which states that upon resignation, a government employee is entitled to receive a lump sum payment and an annuity based on their accumulated pension corpus. This payment is subject to regulations established for exits from the NPS before reaching retirement age.

It is important to note that any payments—both lump sum and annuity—will not be processed until 90 days have passed from the effective resignation date and the employee has been relieved of their duties. In cases where the employee dies within this 90-day period, the eligible beneficiary will receive the payment immediately according to the regulations set by the PFRDA.

Also read: Central govt employees alert! New guidelines on NPS contributions issued

Additionally, employees who resign have the option to continue contributing to the National Pension System as non-Government subscribers, retaining their Permanent Retirement Account Number (PRAN).

The memorandum emphasizes that all ministries and departments must inform relevant personnel about these provisions to ensure strict compliance and implementation regarding the resignation entitlements under the NPS.