NPS Pension Withdrawals: In lieu of receiving regular monthly pensions, the Systematic Lump sum Withdrawal (SLW) plan in NPS investments enables you to withdraw your corpus within predetermined timeframes and in a lump sum. Recently, the Pension Fund Regulatory and Development Authority (PFRDA) proposed the introduction of the SLW facility, which would enable subscribers to withdraw money in lump sums over time.
SLW Facility Details
According to the aforementioned rule, subscribers may use SLW to withdraw up to 60% of their pension fund on a monthly, quarterly, annual, or half-yearly basis. They may do this as long as they choose, up until the age of 75, when they would normally retire. This announcement was made in a circular released by PFRDA on October 27, 2023.
Postponed Withdrawals for Senior Subscribers
However, as of right now, subscribers who are 60 years of age or older and have reached superannuation can postpone annuity and lump sum withdrawals until they are 75 years old. The lump sum may be withdrawn by the subscriber in one installment or on an annual basis; the subscriber should make the annual withdrawal first. The SLW was introduced by Protean CRA for NPS subscribers. This enables subscribers to take out portions of the lump sum corpus upon maturity and to take out their desired amount on a regular basis, much like an SMP in mutual funds.
Voluntary Contributions in NPS
In order to secure their non-working years, members of the National Pension System (NPS) can choose to contribute monthly to either their Tier I or Tier II accounts. Monthly interest is also earned on the amount contributed. The NPS interest rate is computed on a compounding basis, which ultimately results in the construction of a sizable corpus. It typically falls between 9% and 12%.
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