PENSION
FUND REGULATORY AND DEVELOPMENT AUTHORITY
EXPOSURE
DRAFT
ON GUIDELINES FOR WITHDRAWAL OF 25 % OF
ACCUMULATED CONTRIBUTIONS BY NPS SUBSCRIBERS
Issued on: 15th January,
2014
Last date to accept
Comments: 15th February, 2014
As per Chapter VI, Sec 20
(2b) of the PFRDA act, 2013 it has been provided that withdrawals, not
exceeding twenty-five percent (25%) of the contribution made by the subscriber,
may be permitted from the individual pension account subject to the conditions,
such as purpose, frequency and limits as may be specified by the regulations.
Keeping the above in
perspective, the draft guidelines for withdrawal of 25 % of accumulated
contributions by NPS subscribers are proposed and comments from the public and
all concerned are invited. It may also be noted that suggestions on
addition/alteration in the proposed guidelines can also be given.
Comments/Feedback may be forwarded by email to the e-mail id
k.sumit@pfrda.org.in latest by 15.02.2014.
Comments should be given in
the following format:
|
Name of entity/ person
|
|
Sl.No.
|
Pertains to which Section/sub-section and Page number
|
Proposed/ suggested changes
|
Rationale
|
Written comments in the
above format may be addressed to:
Mr. Sumit
Kumar
Dy.
General Manager
Pension
Fund Regulatory & Development Authority 1st Floor, ICADR Building, Vasant
Kunj Institutional Area Phase - II Vasant Kunj, New Delhi – 110070
PENSION
FUND REGULATORY AND DEVELOPMENT AUTHORITY
INTRODUCTION
As per Chapter VI, Sec 20
(2b) of the PFRDA act, 2013 it has been provided that withdrawals, not
exceeding twenty-five percent (25%) of the contribution made by the subscriber,
may be permitted from the individual pension account subject to the conditions,
such as purpose, frequency and limits as may be specified by the regulations.
In order to finalise the regulations for withdrawals, it becomes imperative to
develop the formal aspects of the permitted withdrawals allowed under the Act
for the benefit of NPS subscribers.
EXISTING EXIT / WITHDRAWAL
GUIDELINES UNDER NATIONAL PENSION SYSTEM (NPS)
The current exit /
withdrawal guidelines under NPS are framed in such a manner that the subscriber
has a long period of accumulation of corpus for providing him with a decent
accumulated pension wealth when he retires or he moves out of the regular work
routine due to age. Also, it lets the subscriber have the freedom to move out
of the scheme at any point of time, irrespective of cause or reason which
determines the complete exit from the scheme.
The following are the current rules/guidelines for withdrawals under NPS as
approved by PFRDA:
a) Exit from
NPS upon attaining the age of Normal superannuation (for govt. employees only)
or upon attaining the age of 60 years (for all subscribers other than govt.
employees): At least
40% of the accumulated pension wealth of the subscriber needs to be mandatorily
utilized for purchase of an annuity providing for the monthly pension of the
subscriber and the balance is paid as a lump sum payment to the subscriber.
b) Exit from
NPS before attaining the age of Normal superannuation (for govt. employees
only) or before attaining the age of 60 years (for all subscribers other than
govt. employees): At least
80% of the accumulated pension wealth of the subscriber needs to be utilized
for purchase of an annuity providing for the monthly pension of the subscriber
and the balance is paid as a lump sum payment to the subscriber.
c) Upon
Death : The
entire accumulated pension wealth (100%) would be paid to the nominee / legal
heir of the subscriber. For Swavalamban withdrawals under (a) & (b) in the
previous page, there is an overriding condition on the lump sum payment payable
due to which the entire accumulated pension wealth would be annuitised in case
if the monthly pension obtained by using the 40%/80% of the pension wealth is
below Rs.1000/- per month. Also, these exit/withdrawal rules as applicable to
NPS can be modified/altered from time to time by the Authority as the NPS progresses.
BACKGROUND
The withdrawal of 25% of
accumulated contributions under NPS is in addition to the withdrawal permitted
at the time of exiting from NPS by the subscriber as specified above. The
subscriber can continue to contribute in the scheme while using such withdrawal
facility. These guidelines shall determine the circumstances under which the
NPS subscriber can avail such withdrawal functionality under different time
frames and thereby putting certain limits to which shall be adhered by him/her.
The guidelines are framed
taking into the purpose and object of NPS i.e., to ensure a decent accumulated
pension wealth in the accounts of the subscribers at the time of exit.
FEEDBACK /COMMENT
PERIOD
The Feedback /Comments on
this exposure draft received till 15th February, 2014 would be considered for
evaluation by PFRDA. The decision of PFRDA on all and any matters related to
the subject matter is final and binding on all stakeholders.
PROPOSED
GUIDELINES FOR WITHDRAWAL OF 25 % OF ACCUMULATED CONTRIBUTIONS BY NPS
SUBSCRIBERS
As per Chapter VI, Sec 20
(2b) of the PFRDA act, 2013 it has been provided that withdrawals, not
exceeding twenty-five percent (25%) of the contribution made by the subscriber,
may be permitted from the individual pension account subject to the conditions,
such as purpose, frequency and limits as may be specified by the regulations.
As the decision in this regard has to form part of the regulations to be made
under Sec 52 of PFRDA Act, we need to arrive at a decision on the matter
purpose, frequency and limits of such withdrawals which would be allowed.
Posts examining the various
aspects of the probable needs and duration, following aspects have been
proposed in respect of the aforesaid guidelines:
(a) Purpose : This withdrawal
may be treated as partial withdrawal and whereby the subscriber can withdraw
not exceeding twenty-five percent (25%) of the contribution made by the
subscriber, may be permitted from the individual pension account for any of the
following purposes only:
i) For Higher education of
his/her children including a legally adopted child.
ii) For the marriage of
his/her children, including a legally adopted child.
iii) For the
purchase/construction of residential house or flat. However, if the subscriber
already owns a residential house or flat, the same is not allowed as a ground
for the withdrawal.
iv) Treatment for
prescribed illnesses – suffered by subscriber or his legally wedded spouse and
children. For this purpose, the prescribed illness referred above consists of
hospitalization and treatment for the following diseases/illnesses:
1. Cancer
2. Kidney Failure (End
Stage Renal Failure)
3. Primary Pulmonary
Arterial Hypertension
4. Multiple Sclerosis
5. Major Organ
Transplant
6. Coronary Artery Bypass
Graft
7. Aorta Graft
Surgery
8. Heart Valve
Surgery
9. Stroke
10. Myocardial Infarction
(First Heart Attack)
11. Coma
12. Total blindness
13. Paralysis
b) Limits : It has been proposed that there should be limitation on
eligibility as well as the maximum limit for each withdrawal that can be
permitted till the person stays invested in National Pension System. We propose
the following eligibility criteria and limit for availing the benefit:
1. The subscriber should
have been in NPS for at least ten years and contributing to the scheme.
2. Subscriber can withdraw
accumulations not exceeding twenty-five percent (25%) of the contributions made
by him and standing to his credit in his NPS account, as on the date of
application for withdrawal.
c) Frequency : It is
recommended that the subscriber may be allowed to withdraw at the most three
(3) times from the scheme during the tenure and should have a gap of at least 5
years before availing the withdrawal facility for the next time. However, the
mandatory requirement of 5 years gap between two successive permitted withdrawals
would not be applicable in case of “treatment for above prescribed
illnesses”.
We are proposing the above
frequency in order to make sure that the subscriber should be left with a
decent and considerable accumulated pension wealth at the time of
superannuation/age of 60 years enabling him to purchase sustainable
annuity.
The request for withdrawal
should be sent along with relevant document through the Nodal
Office/POP/Aggregator to Central Record Keeping Agency for processing of the
withdrawal claim.
Source: http://www.pfrda.org.in/writereaddata/linkimages/Exposure%20Draft%20withdrawal.pdf
