Withdrawals from National Pension Scheme

The government has now made it possible to withdraw money from your Pension Fund. This has been made possible by the PRFDA or the Pension Fund Regulatory and Development Authority. You can therefore withdraw from your account through online means as well. 

However, experts still suggest that withdrawals should not be taken lightly. 

Experts argue that despite the new rule which is certainly for the benefit of the masses and is to make their lives easier, it is still their Pension Fund. Withdraw too much and too frequently, and people can lose their savings. 

However, they can certainly use the money for emergency purposes, and for times when they really need money. For instance, you can withdraw for emergency circumstances, for weddings, and the like. 

At the same time, it should be remembered that you can make withdrawals only after 3 years are completed. There is a withdrawal limit as well. You can take out 25% of your savings. 

Earlier, you could not have partial withdrawals from your National Pension Fund. However, now it is possible, but it should be done only for specific purposes. It includes:

• medical emergencies

• education of children

• for treating a disability

• for buying property, 

You can withdraw only 3 times over the entire tenure of your Pension Fund. This is to stop people from withdrawing too much against their own good, and to control overspending. 

FAQ

How can I make a withdrawal from the National Pension Fund?

To do this, you don’t need to submit an application in person or at the nodal office with documents and reasons. Instead, you can just apply online. In your online application, just make a self-declaration. Once you do this, your money will get transferred to your bank account 5 days later.

Is there a tax exemption on withdrawal?

According to experts, the money you withdraw is exempted from tax. However, if you close your NPS account prematurely before you reach the age of 60, there shall be taxes. In such a case, you can take out only 20% of the savings, and the remaining amount shall be annualized. While the lump sum is exempted from tax, the income from annuity will be added to your income and shall be taxed.