Exposure Draft on Guidelines for withdrawal of 25% accumulated contributions by NPS Subscribers
PENSION FUND REGULATORY AND DEVELOPMENT AUTHORITY
EXPOSURE DRAFT
ON GUIDELINES FOR WITHDRAWAL OF 25 % OF ACCUMULATED CONTRIBUTIONS BY NPS SUBSCRIBERS
Issued on: 15th January, 2014
Last date to accept Comments: 15th February, 2014
As
per Chapter VI, Sec 20 (2b) of the PFRDA act, 2013 it has been provided
that withdrawals, not exceeding twenty-five percent (25%) of the
contribution made by the subscriber, may be permitted from the
individual pension account subject to the conditions, such as purpose,
frequency and limits as may be specified by the regulations.
Keeping
the above in perspective, the draft guidelines for withdrawal of 25 %
of accumulated contributions by NPS subscribers are proposed and
comments from the public and all concerned are invited. It may also be
noted that suggestions on addition/alteration in the proposed guidelines
can also be given. Comments/Feedback may be forwarded by email to the
e-mail id k.sumit@pfrda.org.in latest by 15.02.2014.
Comments should be given in the following format:
| Name of entity/ person |
| Sr.No. | Pertains to which Section/sub-section and Page number | Proposed/ suggested changes | Rationale |
| | | | |
Written comments in the above format may be addressed to:
Mr. Sumit Kumar
Dy. General Manager
Pension Fund Regulatory & Development Authority
1st Floor, ICADR Building, Vasant Kunj Institutional Area Phase - II
Vasant Kunj, New Delhi - 110070
PENSION FUND REGULATORY AND DEVELOPMENT AUTHORITY
INTRODUCTION
As
per Chapter VI, Sec 20 (2b) of the PFRDA act, 2013 it has been provided
that withdrawals, not exceeding twenty-five percent (25%) of the
contribution made by the subscriber, may be permitted from the
individual pension account subject to the conditions, such as purpose,
frequency and limits as may be specified by the regulations. In order to
finalise the regulations for withdrawals, it becomes imperative to
develop the formal aspects of the permitted withdrawals allowed under
the Act for the benefit of NPS subscribers.
EXISTING EXIT / WITHDRAWAL GUIDELINES UNDER NATIONAL PENSION SYSTEM (NPS)
The
current exit / withdrawal guidelines under NPS are framed in such a
manner that the subscriber has a long period of accumulation of corpus
for providing him with a decent accumulated pension wealth when he
retires or he moves out of the regular work routine due to age. Also, it
lets the subscriber have the freedom to move out of the scheme at any
point of time, irrespective of cause or reason which determines the
complete exit from the scheme.
The following are the current rules/guidelines for withdrawals under NPS as approved by PFRDA:
a)
Exit from NPS upon attaining the age of Normal superannuation (for
govt. employees only) or upon attaining the age of 60 years (for all
subscribers other than govt. employees): At least 40% of the accumulated
pension wealth of the subscriber needs to be mandatorily utilized for
purchase of an annuity providing for the monthly pension of the
subscriber and the balance is paid as a lump sum payment to the
subscriber.
b) Exit from NPS before attaining the age of Normal
superannuation (for govt. employees only) or before attaining the age of
60 years (for all subscribers other than govt. employees): At least 80%
of the accumulated pension wealth of the subscriber needs to be
utilized for purchase of an annuity providing for the monthly pension of
the subscriber and the balance is paid as a lump sum payment to the
subscriber.
c) Upon Death: The entire accumulated pension wealth (100%) would be paid to the nominee / legal heir of the subscriber.
For
Swavalamban withdrawals under (a) & (b) in the previous page, there
is an overriding condition on the lump sum payment payable due to which
the entire accumulated pension wealth would be annuitised in case if
the monthly pension obtained by using the 40%/80% of the pension wealth
is below Rs.1000/- per month. Also, these exit/withdrawal rules as
applicable to NPS can be modified/altered from time to time by the
Authority as the NPS progresses.
BACKGROUND
The
withdrawal of 25% of accumulated contributions under NPS is in addition
to the withdrawal permitted at the time of exiting from NPS by the
subscriber as specified above. The subscriber can continue to contribute
in the scheme while using such withdrawal facility. These guidelines
shall determine the circumstances under which the NPS subscriber can
avail such withdrawal functionality under different time frames and
thereby putting certain limits to which shall be adhered by him/her.
The
guidelines are framed taking into the purpose and object of NPS i.e.,
to ensure a decent accumulated pension wealth in the accounts of the
subscribers at the time of exit.
FEEDBACK /COMMENT PERIOD
The
Feedback /Comments on this exposure draft received till 15th February,
2014 would be considered for evaluation by PFRDA. The decision of PFRDA
on all and any matters related to the subject matter is final and
binding on all stakeholders.
PROPOSED GUIDELINES FOR WITHDRAWAL OF 25 % OF ACCUMULATED CONTRIBUTIONS BY NPS SUBSCRIBERS
As
per Chapter VI, Sec 20 (2b) of the PFRDA act, 2013 it has been provided
that withdrawals, not exceeding twenty-five percent (25%) of the
contribution made by the subscriber, may be permitted from the
individual pension account subject to the conditions, such as purpose,
frequency and limits as may be specified by the regulations. As the
decision in this regard has to form part of the regulations to be made
under
Sec 52 of PFRDA Act, we need to arrive at a decision on the matter
purpose, frequency and limits of such withdrawals which would be
allowed.
Posts examining the various aspects of the probable
needs and duration, following aspects have been proposed in respect of
the aforesaid guidelines:
(a) Purpose:
This
withdrawal may be treated as partial withdrawal and whereby the
subscriber can withdraw not exceeding twenty-five percent (25%) of the
contribution made by the subscriber, may be permitted from the
individual pension account for any of the following purposes only:
i) For Higher education of his/her children including a legally adopted child.
ii) For the marriage of his/her children, including a legally adopted child.
iii)
For the purchase/construction of residential house or flat. However, if
the subscriber already owns a residential house or flat, the same is
not allowed as a ground for the withdrawal.
iv) Treatment for
prescribed illnesses – suffered by subscriber or his legally wedded
spouse and children. For this purpose, the prescribed illness referred
above consists of hospitalization and treatment for the following
diseases/illnesses:
1. Cancer
2. Kidney Failure (End Stage Renal Failure)
3. Primary Pulmonary Arterial Hypertension
4. Multiple Sclerosis
5. Major Organ Transplant
6. Coronary Artery Bypass Graft
7. Aorta Graft Surgery
8. Heart Valve Surgery
9. Stroke
10. Myocardial Infarction (First Heart Attack)
11. Coma
12. Total blindness
13. Paralysis
b) Limits:
It
has been proposed that there should be limitation on eligibility as
well as the maximum limit for each withdrawal that can be permitted till
the person stays invested in National Pension System. We propose the
following eligibility criteria and limit for availing the benefit:
1. The subscriber should have been in NPS for at least ten years and contributing to the scheme.
2.
Subscriber can withdraw accumulations not exceeding twenty-five percent
(25%) of the contributions made by him and standing to his credit in
his NPS account, as on the date of application for withdrawal.
c)
Frequency: It
is recommended that the subscriber may be allowed to withdraw at the
most three (3) times from the scheme during the tenure and should have a
gap of at least 5 years before availing the withdrawal facility for the
next time. However, the mandatory requirement of 5 years gap between
two successive permitted withdrawals would not be applicable in case of
“treatment for above prescribed illnesses”.
We are proposing the
above frequency in order to make sure that the subscriber should be
left with a decent and considerable accumulated pension wealth at the
time of superannuation/age of 60 years enabling him to purchase
sustainable annuity.
The request for withdrawal should be sent
along with relevant document through the Nodal Office/POP/Aggregator to
Central Record Keeping Agency for processing of the withdrawal claim.
Source:
www.pfrda.org.in
[http://www.pfrda.org.in/writereaddata/linkimages/Exposure%20Draft%20withdrawal.pdf]
