NPS partial withdrawal rule to change from 1st January for these subscribers; know what’s new

PFRDA has said that the online partial withdrawal facility from NPS through self-declaration will no longer be available for government sector subscribers, starting from January 1, 2023.

All you need to know about the changes in NPS partial withdrawal rule

In the wake of the Covid-19 pandemic, the pension regulator in January 2021, had allowed NPS subscribers to request for partial withdrawal online through self-declaration. Now with the abating of pandemic-related difficulties, PFRDA has said that the online partial withdrawal facility from NPS through self-declaration will no longer be available for government sector subscribers, starting from January 1, 2023. The list will include subscribers from the central government, state government, and central autonomous bodies.


“With the abating of the pandemic-related difficulties & relaxation of lock down restrictions, the issue examined after taking into consideration of the prevalent practices, circumstances and law, it has been decided to make it mandatory for all the Government sector subscribers (central/state govt & central/state autonomous bodies) to submit their requests through their associated nodal offices,” the Pension Fund Regulatory and Development Authority (PFRDA) stated in a circular issued on December 23, 2022.


Covid-related relaxation available to govt sector NPS subscribers

PFRDA, in January 2021, had issued a circular, where it allowed partial withdrawals under NPS “through self-declaration for the benefit of subscribers as a special dispensation to cope with the Covid pandemic in order to protect the subscribers’ interest and ease the burden of nodal officers including POPs from verification and authorization. In terms of the said circular, the online requests of the subscribers are directly processed in the CRA system post Instant bank account verification through penny drop, without the need for the authorization by the associated nodal officers/POPs. It has benefited the subscribers during the Covid-19 pandemic and immobility caused due to lockdowns

in various parts of the country to contain the spread of corona,” PFRDA stated in its December 23, 2022 circular.


What non-government sector NPS subscribers must know

The regulator, however, mentioned that the partial withdrawal facility through the self-declaration process will continue to be available to voluntary non-government NPS subscribers. “The subscribers belonging to the voluntary segment of the NPS (all citizens and corporate) may continue to use the process as mentioned in the cited circular,” the regulator said.


When will this NPS partial withdrawal rule come into effect?

Do remember that this partial withdrawal rule will come into effect from January 1, 2023.


For partial withdrawal, the following conditions need to be fulfilled, according to Protean, eGov Technologies Limited website, a central recordkeeping agency (CRA)

 1) Subscriber should be in NPS at least for three years


2) Withdrawal amount should not exceed 25 per cent of the contributions made by the NPS subscriber


3) PFRDA allows a maximum of three partial withdrawals during the entire tenure of the NPS subscription


4) Withdrawal is allowed only against the specified reasons, for example;

a) Higher education of children

b) Marriage of children

c) For the purchase/construction of a residential house (in specified conditions)

d) For treatment of Critical illnesses


During the Covid-19 pandemic, the regulator has allowed partial withdrawal based on self-declaration and removed the requirement to submit supporting documents to substantiate the reasons for partial withdrawal. Non-government NPS subscribers can still avail this benefit.


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Source: Economictimes