Exit from NPS

Subscribers have the option to exit from NPS after 10 years of account opening or attaining 60 years of age, whichever is early. Subscribers have following 2 exit options from NPS:

1. Exit before the age 60 years
2. Exit at Retirement/ at 60 years

(1) Exit before the age 60 years

Up to 20% of Corpus can be withdrawn in lump sum and the balance amount (80%) needs to be invested in annuity providing for the monthly pension to the subscriber. In such cases, the annuity will start immediately based on annuity Plan he has invested in. However, if the NPS corpus is less than or equal to Rs. 1 lakh, there is no need to invest into annuity and the entire amount can be withdrawn in lump sum.

In case of pre-mature exit from NPS (before the age of 60 years), subscribers do not have option to defer the withdrawal option.

(2) Exit at Retirement/ at 60 years

There are following 3 options available:

Option (1) Exit from NPS at 60: Up to 60% of Corpus can be withdrawn in lump sum and the balance amount needs to be invested in annuity. Subscribers can even use 100% of accumulated wealth to buy annuity plan. The annuity will be generated with a PFRDA-registered insurance company (Annuity Service Provider) to provide monthly pension after your retirement. There are various annuity plans offered by insurance companies, you can choose any of them.

Option (2) Continue NPS till 70 years with contribution: You can choose to continue contributing to NPS for more 10 years i.e. up to 70 years of age. This option is better, if you are earning after the age of 60. Thereafter at the age of 70, withdrawal rules will be the same as the exit from NPS at 60.

Option (3) Continue NPS with till 70 years without contribution: You can choose to continue NPS for more 10 years i.e. up to 70 years of age without making any further contribution to NPS, if want your corpus to grow more by 10 years. This option is preferred when you have any other source of monthly income. At the age of 70, withdrawal rules will be the same as an exit from NPS at 60. This option has to be exercised 15 days before the default date of withdrawal.

However, if the NPS corpus is less than or equal to Rs. 2 lakhs, there is no need to invest into annuity and the entire amount can be withdrawn in lump sum.

Subscriber can withdraw this amount either in lump sum or take the same in 10 installments before attaining the age 70 years. Subscriber has the option to defer the withdrawal option till 10 years depending on the market condition. During such period, the fund will continue to remain invested. The Pension Fund Manager, Scheme Preference and Asset Allocation Pattern will remain the same as these were at the time of vesting.