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Understanding Partial Withdrawal Rules for NPS Accounts

The National Pension System (NPS) offers a reliable avenue for pension benefits post-retirement. Besides the regular pension, individuals can opt for partial withdrawals as per their needs. However, it’s crucial to grasp the terms and conditions associated with such withdrawals.

Operated by the Pension Fund Regulatory and Development Authority (PFRDA), NPS underwent rule revisions in February 2024, affecting partial withdrawal policies.

Key Points:

  1. Partial Withdrawal Criteria: Withdrawals from an NPS account can be initiated after three years from the account’s opening. The recent amendments stipulate that individuals can’t withdraw more than 25 percent of the total amount.
  2. Withdrawal Circumstances: Partial withdrawals can be made under various circumstances, including:
    • Purchasing a house
    • Financing children’s education or marriage
    • Meeting medical emergencies
    • Supporting entrepreneurial endeavors or startups
    • Funding skill development
    • Coping with disability due to an accident
  3. Conditions for Withdrawal: To qualify for partial withdrawal:
    • The NPS account must be active for at least three years.
    • Only up to 25 percent of the total amount can be withdrawn.
    • Partial withdrawals can be made a maximum of three times before maturity.
  4. Withdrawal Procedure: To withdraw funds from your NPS account:
    • Submit a withdrawal request, specifying the reason for withdrawal.
    • Provide necessary documentation supporting the reason.
    • Upon approval, the withdrawn amount will be transferred to your bank account within a few days.

Understanding these rules and conditions ensures that individuals can leverage NPS effectively, balancing financial needs with long-term retirement planning.

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