Introduction: The Pension Fund Regulatory and Development Authority (PFRDA) has issued Circular no: PFRDA/2023/30/SUP-CRA/10 on 27th Oct, 2023, addressing NPS stakeholders. The circular introduces the Facility of Systematic Lump Sum Withdrawal (SLW) for NPS Subscribers, bringing changes to the existing exit guidelines.
Detailed Analysis:
1. Existing Exit Guidelines: Currently, NPS subscribers can choose to defer availing of annuity and withdrawing the lump sum until they reach 75 years of age, following the age of 60 years or superannuation. The lump sum can be withdrawn either in a single tranche or on an annual basis. Subscribers opting for annual withdrawal have to initiate withdrawal requests each time.
2. Systematic Lump Sum Withdrawal (SLW): The circular proposes the introduction of Systematic Lump Sum Withdrawal (SLW) as per PFRDA regulations. Subscribers can now withdraw up to 60% of their pension corpus systematically through SLW. The withdrawals can be made monthly, quarterly, half-yearly, or annually. This flexibility allows subscribers to plan their financial security effectively, choosing a withdrawal frequency that suits their needs.
3. Information Dissemination: To educate NPS stakeholders about SLW, all Nodal offices, Points of Presence, NPST, and Corporates are encouraged to spread awareness. Central Record Keeping Agencies (CRAs) are expected to publish FAQs and educational podcasts on SLW, emphasizing its benefits and explaining the initiation process on their websites and social media platforms.
Conclusion: The PFRDA’s Circular introduces a significant change to the National Pension System, offering subscribers the option of Systematic Lump Sum Withdrawal (SLW). This change enhances flexibility, allowing subscribers to plan their lump sum withdrawals according to their financial needs and preferences. To ensure subscribers make informed decisions, NPS stakeholders are encouraged to disseminate information and educational resources about SLW. This development represents a positive step toward providing greater financial security to NPS subscribers as they approach retirement.
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PENSION FUND REGULATORY AND DEVELOPMENT AUTHORITY
Circular no: PFRDA/2023/30/SUP-CRA/10 Dated: 27th Oct,2023
To
All NPS Stake Holders
Subject: Facility of Systematic Lump sum Withdrawal (SLW) for NPS Subscribers
As per the existing exit guidelines, the subscribers post 60 years/superannuation can defer availing of annuity & withdrawing the lump sum on any combination till 75 years of age. The lump sum amount can be withdrawn in a single tranche or it can be withdrawn on an annual basis. If withdrawn annually, the Subscriber has to initiate the withdrawal request each time and authorized.
2. In accordance with Regulation 3 and Regulation 4 of PFRDA (Exits and Withdrawals under the NPS) Regulations, 2015 and amendments therein, it is proposed to provide the option of phased withdrawal of the lump sum through Systematic Lump Sum Withdrawal (SLW) facility. The subscribers are allowed to withdraw up to 60% of their pension corpus, through the SLW on a periodical basis viz. monthly, quarterly, half-yearly or annually for a period till 75 years of age as per the choice at the time of their normal exit.
3. All Nodal offices, Points of Presence, NPST and Corporate can disseminate the information about SLW for the associated Subscribers who superannuate or reaching the age of 60 years and plan to exit from NPS. Central Record Keeping Agencies (CRAs) can publish FAQs and release educational podcasts on SLW, highlighting its benefits and explaining the process of initiating SLW on their websites and social media platforms.
This circular is issued in exercise of powers conferred under section 14 (1) of The Pension Fund Regulatory & Development Authority Act, 2013.
Digitally signed by
K MOHAN GANDHI
Chief General Manager
