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NPS Withdrawal Online: All You Need To Know

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NPS Withdrawal Online- All your need to Known
November 09, 2023

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Retaining your financial independence even after retirement is crucial. Investing in the best pension plan in India can help you get one step closer to this goal. The National Pension System (NPS) is one such scheme that can help you secure your post-retirement finances.

What is the National Pension System (NPS)?

NPS is a voluntary retirement savings scheme by the Indian government. It provides a lump sum amount and monthly pension for life. Regular contributions are required until age 60. Withdrawal and partial premature withdrawal options add flexibility. Two account types exist: Tier-I (mandatory) and Tier-II (optional with Tier-I). Withdrawal rules depend on the account type.

NPS Withdrawal Rules  

The Pension Fund Regulatory and Development Authority (PFRDA) is the entity responsible for supervising and regulating the National Pension System. The PFRDA has laid out several rules regarding the withdrawal of funds from an NPS account. Here’s a closer look at some of the key NPS withdrawal rules and regulations. 

  • Withdrawal at the Age of 60 

    At 60 years of age, you can withdraw up to 60% of NPS corpus as a lump sum. The rest is used to buy an annuity plan for regular pension payments. If the corpus is ≤Rs. 5 lakhs, full withdrawal is allowed.

  • Withdrawal in the case of Premature Exit 

    Premature exit from NPS is possible after 5 years. Withdrawal is limited to 60% of the total corpus, but 100% is allowed if corpus ≤Rs. 2.5 lakhs.

  • Partial Premature Withdrawal 

    Alternatively, you may also opt for partial withdrawal without exiting the National Pension System. In this case, you can only withdraw up to 25% of the total accumulated corpus. The partial withdrawal option is only available after the expiry of 10 years from the date of opening your NPS account. 

How to Withdraw Funds From Your NPS Account Online? 

The PFRDA has empowered three Central Record Keeping Agencies (CRAs) to open and manage NPS accounts. The process to withdraw funds from your NPS account is largely similar across CRAs. Here’s an overview of the steps that you need to follow. 

  • Step 1: Visit the NPS account portal of your CRA. 

  • Step 2: Log into your account using the user ID and password provided at the time of registration.

  • Step 3: Initiate an online withdrawal request. 

  • Step 4: Enter all of the details, such as the percentage of corpus you wish to withdraw as a lump sum amount and the percentage of corpus you wish to invest in an annuity plan, among others. 

  • Step 5: Upload all KYC documents like proof of identity, proof of address, and bank account proof in the portal. 

  • Step 6: Enter the OTP sent to your registered mobile number to authenticate the withdrawal request. 

  • Step 7: Upon successful authentication, sign the system-generated withdrawal form through the Aadhaar eSign protocol.

  • Step 8: Once the Aadhaar eSign is complete, your withdrawal request will be submitted to the concerned Point of Presence (POP) bank. 

The bank will verify your withdrawal request along with the uploaded KYC documents. Once the verification is complete, the lump sum amount that you chose to withdraw will be deposited in your bank account.    

Note: The withdrawal process explained above is only applicable to Tier-I NPS accounts. To withdraw funds from Tier-II NPS accounts, you need to fill out and submit form UOS-S12 to the concerned POP bank. 

Conclusion

The National Pension System is one of the best pension plan in India with a transparent and well-regulated scheme to help you financially secure your post-retirement future.  

Consider life insurance in addition to NPS for enhanced family financial protection. It offers maturity and death benefits, providing a lump sum payout.   

Annuity Service Providers: 

PFRDA is a statutory body set up by the Government of India to regulate and develop the pension sector in India. An annuity pension is a type of pension in which the pensioner receives a fixed monthly income as per terms and condition of the plan

The relationship between PFRDA and ASPs (Annuity Service Providers) is that PFRDA is the regulator of the National Pension System (NPS), and ASPs are the entities that provide annuity services to NPS subscribers. When an NPS subscriber reaches the age of 60, they are required to annuitize at least 40% of their pension wealth. They can do this by purchasing an annuity from an ASP that is empanelled by PFRDA

You can select any of the annuity schemes offered by Annuity Service Providers (ASPs) registered with IRDAI and empaneled with PFRDA. HDFC Life is one of the registered ASPs for annuity issuance and further servicing.

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Francis Rodrigues Francis Rodrigues

Francis Rodrigues has a decade long experience in the insurance sector, and as SVP, E-Commerce and Digital Marketing, HDFC Life, manages the online sales channel, as well as digital and performance marketing. He has had hands-on experience in setting up sales channels and functional teams from scratch over a career spanning 2 decades.

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Vishal Subharwal Vishal Subharwal

Vishal Subharwal heads the Strategy, Marketing, E-Commerce, Digital Business & Sustainability initiatives at HDFC Life. He is responsible for crafting and ensuring successful implementation of the overall organisation strategy.

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