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Government allows premature withdrawal from New Pension Scheme Fund: Shiv Pratap Shukla

The minimum gap of 5 years between two partial withdrawals has also been removed with effect from August 10, 2017.

Government allows premature withdrawal from New Pension Scheme Fund: Shiv Pratap Shukla

New Delhi: Government has allowed premature withdrawal from New Pension Scheme Fund.

In written reply to a question in Rajya Sabha, Shiv Pratap Shukla, Minister of State for Finance said a subscriber is eligible for three partial withdrawals during the period of subscription under National Pension System (NPS), each withdrawal not exceeding twenty-five percent of the contributions made by the subscriber and excluding contributions made by the employer.

There is, however, no restriction on withdrawals from the Tier-II account of the subscriber. Further, keeping in view the possibility of sudden financial needs of the subscribers, the requirement of minimum period under National Pension System (NPS) for availing the facility of partial withdrawal from the mandatory Tier-I account of the subscriber has been reduced from 10 years to 3 years from the date of joining with effect from August 10, 2017.

The minimum gap of 5 years between two partial withdrawals has also been removed with effect from August 10, 2017.

In December 2018, Government approved the following proposals pertaining to choice of Pension Fund and investment pattern for Central Government subscribers under NPS:

Choice of Pension Fund: Central Government subscribers will be allowed to choose any one of the pension funds including Private sector pension funds.  They could change their option once in a year. However, the current provision of combination of the Public-Sector Pension Funds will be available as the default option for both existing as well as new Government subscribers.

Choice of Investment Pattern: The following options for investment choices will be offered to Central Government employees:

  • Government employees who prefer a fixed return with minimum amount of risk may be given an option to invest 100 percent of the funds in Government securities (Scheme G).
  •     Government employees who prefer higher returns may be given the options of the following two Life Cycle based schemes.
  •         Conservative Life Cycle Fund with maximum exposure to equity capped at 25 percent at the age of 35 years and tapering off thereafter (LC-25).
  •         Moderate Life Cycle Fund with maximum exposure to equity capped at 50 percent at the age of 35 years and tapering off thereafter (LC-50).

In case an employee does not submit any choice, the existing allocation of funds shall continue as the default option.