How to Withdraw from Tier I and Tier II Accounts of National Pension Scheme (NPS)?
By Anupama Deshpande | May 24, 2018

National Pension Scheme (NPS) is a government-sponsored pension scheme. It is more beneficial for those employees who do not have any pension scheme by their employers. It was initially launched for government employees on January 1, 2004 but was opened to all sections in 2009.

National Pension System (NPS) is one of the perfect solutions for retirement planning. It offers regular monthly income after your retirement with reasonable market based returns.

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NPS offers two accounts: Tier-I and Tier-II accounts. Tier-I is a mandatory account and Tier-II is voluntary.

1. Tier I Account: Under Tier I account, you cannot withdraw money till your retirement. This account is there for the purpose of savings after the subscriber's retirement.
2. Tier II Account: Under Tier II account, you are free to withdrawal any or entire money as many times as you want. There is no lock in period under this account.

In both Tier I and Tier II account has to be at least one contribution in a financial year.

Choice of Investment options along with choice of Pension Fund Manager (PFM) can be changed once in the Financial Year for Tier I and Tier II account.

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1. Exit from NPS Before the age of Normal Superannuation: If he/ she wishes to exit from NPS before attaining the age of 60, he/she can withdraw upto 20% of the sum accumulated till that point of time and has to purchase an annuity with the rest 80% of the money. The commencement of the annuity depends on the annuity plan / scheme.
   If the accumulated corpus is less than Rs. 1,00,000 in case of premature exit, it is not mandatory to purchase annuity and you can withdraw the entire amount.
2. Upon Normal Superannuation: If he/ she wishes to exit from NPS after attaining the age of 60, he/she can withdraw upto 60% of the sum accumulated till that point of time and has to purchase an annuity with the rest 40% of the money. The commencement of the annuity depends on the annuity plan / scheme. .
   Subscribers exiting NPS on account of Superannuation can opt for deferring the Withdrawal of their lump sum share (maximum 60%) to a maximum period of 10 years or 70 years of age (whichever is earlier)
   In case of Superannuation, a subscriber can claim 100% Withdrawal if the total accumulated corpus is less than Rs. 2,00,000 at the time of superannuation/ attaining age of 60 years.
3. Upon Death: In case, he/ she dies before attaining the age of 60, the entire accumulated sum in his/ her NPS account will be given to the nominee and there would not be any purchase of annuity/monthly pension.

Withdrawal forms are available on the NSDL-CRA Corporate Website (https://www.npscra.nsdl.co.in). Subscriber can also send an e-mail to [email protected] or [email protected] to obtain the withdrawal forms on their emails. Along with the form, you will have to submit original PRAN card and a few KYC documents.

Withdrawal amount will be credited directly to the bank account of the subscriber/ claimant. It is necessary for the subscriber/ claimant to have a bank account and mention its details in the withdrawal form.

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1. In order to withdraw from Tier II account, the subscriber needs to submit a duly filled UOS-S12 form to the associated POP-SP.
2. If the request is entered and authorised in CRA system by the POP/POPSP before 1.30 PM, then it goes for same day's processing, or else it goes for the next business day.
3. Units are redeemed based on the NAV declared at the end of the processing day.
4. On T+3 day, (T being the date of processing) the funds are transferred from the Trustee Bank to subscriber's bank account as registered in the CRA system.

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Withdrawal status can be checked through the 'Limited access View' functionality which is available at CRA website (www.cra-nsdl.com). Nodal Office and Subscriber can also check the status under the menu 'Exit Withdrawal Request' by logging into website.